U.S. nickel premiums are steady, with traders expecting consumers deterred by high London Metal Exchange prices to return to buying in the medium term.
"My guts tell me there is still a bit of a shortage on some material," one North American trader told AMM.
Three-month nickel ended LME's official session Wednesday at $26,200 per tonne, up 4.2 percent from $25,135 a week earlier and 39.7 percent above the $18,750-per-tonne price at the start of July last year.
Sales are still slow due to the high prices, sources said, but customers will have to come back to the market at some point, and when they do, traders will push for them to pay premiums at current levels. "They're kind of getting to the point where they have to buy," the trader said.
A second trader agreed that there had been no decrease in premiums even as nickel prices shot up by $1,000 per tonne in one day last week, dismissing a correlation between high prices and lower premiums.
If prices remain at such high levels, though, some sellers would eventually lower premiums to get customers, a third trader said. "People are seeing some of the high prices and will lure customers with lower premiums," he said.
Premiums for melting-grade material are steady at between 35 and 50 cents per pound, while plating-grade premiums are in a range of 65 cents to $1 per pound.
Because prices are increasing so rapidly, customers are less focused on premiums, as they represent a smaller percentage of the purchase price, the first trader said. "As the price is increasing quicker than the premiums, they start to matter less," he said.
The only material that might be affected in the long term would be plating grade, as there seems to be plenty available, he said.
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