News item
18 May 10
Fodder for the media
In consequence of the hysteria about Greece, both the financial and commodity markets have made clear corrections with the commodities moving the most. Copper prices dropped from just over USD 8,000.00/mt to below USD 6,500.00/mt. Without any change to fundamental data, nickel fell from USD 27,000.00/mt to below USD 21,000.00/mt.
The International Stainless Steel Federation (ISSF) announced that the stainless production for the first quarter was up by 11.5%, amounting to 7.472 million tons, an increase of 54.6% compared to the same quarter of the previous year. The price corrections on the London Metal Exchange (LME) were, however, more than overdue in order to stabilise the market in light of the extreme rise of prices previous to this, even though the downwards trend does have the tendency to be somewhat over exaggerated. But now the low of the correction does seem to have been reached. The question remaining is whether the market will move into a phase of consolidation taking in further slight dips, or whether it will make a rebound and return to the old (climbing) trend. From a technical point of view, there are some tentative signs appearing to support the latter, but which must not be overvalued at present. The continuing anxiety in the market could continue to have a negative effect on prices. As has been seen in the past, low nickel prices, presumably via alloy surcharges, tend to push down prices for stainless steel and surprisingly also demand since the general expectation is then that prices will continue to fall as orders are held back. Nevertheless, this pattern of events should not continue indefinitely to let a feared spiral of deflation take control. This scenario is, however, not the most likely in view of the good data being reported out of the global real economy and from the stainless steel industry.