Continuation of Turbulence in the Nickel Market, Chances of Another Ban and Impact on Consumers

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By: Badri Narayanan -- Lead Analyst

25 September, 2014

Continuation of Turbulence in the Nickel Market, Chances of Another Ban and Impact on Consumers
WHITEPAPER

1. Introduction: The nickel price rally witnessed so far in 2014 has adversely impacted stainless steel consumers across the globe. At a time when the rally was expected to stabilize, a proposed ban on nickel ore export in Philippines is leading to an increase in nickel price volatility and is leading to a split opinion regarding the continuation of rally in nickel (consequently) and stainless steel prices. 2. Main: While the global nickel market and stainless steel consumers are still facing the effects of the Indonesian nickel ore export ban, market is rife with speculation regarding a similar ban by Philippines. If implemented, the ban by Philippines will suck out about 15-20% of global nickel ore supply, following another similar loss due to the Indonesian ban. While the likelihood of the ban implementation by Philippines is contentious, the potential impact of any such ban needs to be scrutinized. 3. Recommendation: At this point, the ban by Philippines seems unlikely. The short term volatility in nickel prices that might arise due to speculation surrounding the ban will lead to panic buying among some stainless steel consumers. However, without any substantial government backing this ban will not gain traction and any such short-time price volatility will not translate into long term rally in nickel price. Hence stainless steel consumers are recommended not to indulge in panic buying. However, consumers are recommended to closely monitor the events in the Philippines mining sector to gain more insights on possible impact on nickel and stainless steel prices.