Nickel market tests unprecedented lows.
The price of nickel, viewed initially as a favourite metal for 2015, has fallen 40.5% overall last year, making it the worst-performing of the London Metal Exchange (LME)'s six base metals. At current levels, as much as 60% of the global production base is unprofitable and, if commercial rationale were to prevail, a significant part of this overcapacity should be closed. Instead, the supply response has been slow, boosting inventories.
Low nickel prices will bolster the market share of austenitic stainless steel to the detriment of low-nickel alternatives.
Lianyungang, China's leading port for nickel ore, will not be able to replace Indonesian volumes with imports from the Philippines.
The uptick in merchant premia charged above the LME price in the European and US markets points to near-term stabilisation.
