London 07/01/2016 - European nickel consumers have concluded contracts for 2016 full-plate cathode supply at lower premiums and for reduced volumes, sources told FastMarkets.
Deals in Europe have been reached with premiums of $40-65 per tonne over London Metal Exchange (LME) cash prices and on in in-warehouse Rotterdam basis, down from a wider range of $50-90 in 2015.
Nickel is used to create metal alloys, foremost stainless steel; annual consumption in Europe is 354,000 tonnes, according to 2014 statistics from the International Nickel Study Group.
Nickel was the biggest price faller of all base metals on the London Metal Exchange during 2015, dropping 41 percent from $14,830 per tonne at the start of the year to $8,800 by the end.
But despite drastically lower prices at present, demand for physical nickel has also slipped, with European stainless steel producers and other nickel consumers currently suffering from poor orders for products.
"In the run-up to contracting, all consumers were saying the same thing: that their Christmas holiday shutdown was extended because the orders aren't there," a seller in the market said. "Plants are still running but there's nobody in the office."
And volumes booked in Europe have been slightly lower for 2016 delivery, with consumers sitting on sufficient levels of stocks.
"Some customers have some remaining volume from the previous year [2015] contracts, which is being carried over," another seller said.
Low prices and full-plate cathode spot premiums at $30-40 per tonne are also encouraging consumers to take their chances and rely more on the spot market for supply in 2016, sources said.
(Editing by Mark Shaw)