Metals Update – November 2022

Nickel Volatility Comeback

Nickel Prices fell as much as 12% in volatile and illiquid conditions in a single day of trading this week, leading to the London Metal Exchange (LME) indicating on Wednesday that it was conducting heightened monitoring of nickel trading activity.

As a result of expectations that China will gradually reduce its zero-COVID policy and the increasing prospects of a slowing pace of U.S interest rate rises, industrial metals demand has increased across the board, though not to the same extent as nickel.

The decline followed a ferocious spike in which the stainless steel-making commodity climbed by 40% in just two weeks and, on Monday, broke the LME’s daily limit of 15% for price movements.

The lowest level of liquidity since March was cited by traders as the cause of the volatility. After nickel prices quickly doubled, the London Metal Exchange (LME) on March 8th halted all trading and shut down the market for over a week. Traders are also citing nickel’s short position covering as a reason for the spike this week.

Chinese Aluminium Imports Down, Output Up, Weak Demand Persists

October saw a 33.9% YoY decrease in China’s imports of last year, a result of rising local supply and chronically weak demand. China produced 33.33 million tonnes in the first ten months of the year, an increase of 3.3% from the same period in 2021.

The General Administration of Customs reported that the nation imported 196,460 tonnes of basic metal and unwrought, alloyed aluminium in the previous month.

After a rise in domestic output this year, imports have decreased. It should be highlighted that COVID regulations have continued to be a major contributing factor for demand continuing to be poor.

Increased global aluminium prices, worries that the London Metal Exchange would exclude Russian metal from its trading system, and a potential American ban on Russian metals have contributed to a decline in imports.

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