Will we look back on March 8, 2022, as the day that changed stainless steel?

On this day, LME halted trading of nickel after a short squeeze caused prices to rise 250% to over $50/lb. in the matter of hours.

The cost of nickel is one of the five key elements used by mills to determine stainless steel surcharges.
Typically, mills price surcharges similarly based on market dynamics. However, with such an unusual situation at the LME, stainless producers had varying approaches to addressing the situation. And that is where our story begins.



Nickel Short Squeeze

Outokumpu (OTK), for example, put the shorted price of nickel into its surcharge, which settled at $15.30. However, North American Stainless (NAS) pulled the price out of its calculations for its April 304 surcharge, and artificially set the price to $12.60. That put the spread between it and OTK at $118.40/ton for 304 in April.

However, indications are that NAS will indeed factor in the LME price going forward like normal, which unfortunately would mean an increase of 304 and 316 surcharges.


LME Nickel Trading

There are varying levels of refinement depending on the end use of the nickel. Nickel can be found in a variety of products including stainless steel and some varieties of lithium ion batteries

So, what does that mean? Nick Webb, Ryerson’s director of risk management, commodities hedging, explains: “What you had was a situation where 74,000 metric tons of refined nickel (on the LME) was having knock-on effects on the price of buying an EV or stainless steel products, which was never the intent of the exchange.”

Would that present a risk of the LME contract going away?

Webb opines, “Some could make the argument that North American stainless mills could be pricing their surcharges using stainless scrap rather than nickel because scrap plays a bigger role in how stainless products are made.”

While it’s too early to make any definitive statements about the future of stainless with regards to the events of March 8, it has the market talking about the possibilities going forward.


What Else is Moving the Market? 

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