NSSC reduced SUS304 scrap purchase price by another JYP10/kg forecasting historic fall in nickel price

2015/07/08

Long rain has been steadily breaking the ground on Japanese islands recently, increasing the risks for landslides and mudslides. The metal markets also have experienced phenomenon like a mudslide.

Japanese largest stainless manufacturer, NSSC (Nippon Steel & Sumikin Stainless Steel Corporation) announced their suppliers on 8 July that the company would reduce the purchase price of SUS304 series scraps by another JPY10/kg following the price cut of JPY10/kg conducted at the end of June. Thus, their nominal price will be at JPY130-135/kg, which is an isolated fall.
While their previous price cut has not yet been accepted by the market, the company believed that the declining nickel price would certainly fall further below $10,000/t.

Crash in Chinese stock prices ~ Declines in resource stocks~ Historic drops in metal prices
Greek and China have put downward pressures on the metal markets in recent days.
Especially, declines in Chinese stock prices have caused a big effect on the non-ferrous market, delivering a damaging blow. Following the drops last week, the Chinese stock market have seen waves of stock selling despite of governmentfs various measures to stem the rapid slide of stock prices.

It continued also on 8 July.
On the day, stock prices plunged immediately after Shanghai Stock Exchange Market (SSE) opened. Selling of stocks didnft stop like torrential rain. SSE Composite Index dropped below 3500 in the morning, its lowest figure in four months. And, another worry is the fact that resources stocks have been dropped sharply at SSE.
There exists a relationship between resources stock prices and metal prices that drops in resources stock prices reflect declining international metal prices, which also leads to decreases in resources stock prices.

As the crash in Chinese stock market on 8 July has already transmitted to LME premarket, it will be difficult for nickel price to evade lowering below $10,000/t. Itfs possible to drop even below $9,000/t. The market sentiment has been undermined so much.
NSSCfs price cut of JPY20/kg since the end of June will take time to penetrate the market, but it would begin to ensure reasonable consistency if the nickel price were below $10,000/t.

However, the world economy seems to have taken a bad turn at once.

(Edited by Sasaki)

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