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*Please note that our offices will be closed on Monday, June 20 due to the Juneteenth holiday. We will not produce a Metals First Look that morning. However, the trading desk will provide LME coverage, and current clients can contact metals@aegis-hedging.com for indications. * |
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Chinese stimulus measures and Russian supply issues will support nickel prices in 3Q 2022, according to Fitch Solutions. In a note earlier this week, Fitch stated “Chinese stimulus measures improve the demand outlook and the Russia-Ukraine war continues to disrupt supply.” Russia’s top nickel producer Nornickel has not been sanctioned, but supply chain issues have led to lower supply forecasts, Fitch notes. However, they believe that refineries, specifically in Indonesia, will increase production beginning in late 2022. This could weigh on prices, as Fitch predicts 2023 prices to be $24,000/mt, down from its estimate of $27,500/mt for 2022 prices. Nickel prices have been volatile in 2022, trading to $55,000/mt in early March. Prices are down over 53% since then, to $25,500/mt (7:00 AM CST), and down almost 9.9% in June alone. End-users such as stainless-steel producers might consider using the recent dip in prices by applying simple hedges involving swaps and call options. One other possible strategy is a costless collar. In this case, a “zero-cost collar” creates a maximum and minimum lead price for a stainless-steel producer, as they would simultaneously buy a call option (creating a cap, or maximum) and sell a put option (creating a floor, or minimum). The call and put premiums offset, making the construction costless. It is popular because of the upside price protection, but you sacrifice access to much lower prices if prices should fall. Such positions are standard for consumer hedging, but they can result in opportunity costs or cash costs if metal prices decrease. Please contact AEGIS for specific strategies that fit your operations. (6/17/2022) |
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Note: Clients with AEGIS Platform access can see this and other research, plus hedge portfolio reporting and tools here. |
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Price Indications |
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Today's Charts |
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AEGIS Insights |
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06/15/2022: AEGIS Factor Matrices: Most important variables affecting metals prices 05/23/2022: India's Steel Exports Tariffs Shock Producers 05/11/2022: China's Metals Exports are on the Rise |
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| Important Headlines | ||
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6/16/2022: Tesla to charge more for cars in United States as inflation bites 6/15/2022: Hyundai Motor, Posco restart shipments as trucker strike ends 6/14/2022: South Korea's truckers end crippling strike, reach deal with govt 6/13/2022: Dollar at two-decade high as risky assets sell off; yen recovers ground 6/13/2022: China's lead surplus to offset shortages in U.S. and Europe 6/13/2022: Copper’s outlook under threat as economic risks pile up 6/12/2022: Top Steelmaker in South Korea Halts Production on Trucker Strike 6/12/2022: POSCO to halt some plants as South Korea trucker strike continues |
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Important Disclosure: Indicative prices are provided for information purposes only, and do not represent a commitment from AEGIS Hedging Solutions LLC ("Aegis") to assist any client to transact at those prices, or at any price, in the future. Aegis makes no guarantee to the accuracy or completeness of such information. Aegis and/or its trading principals do not offer a trading program to clients, nor do they propose guiding or directing a commodity interest account for any client based on any such trading program. Certain information in this presentation may constitute forward-looking statements, which can be identified by the use of forward-looking terminology such as “edge,” “advantage,” “opportunity,” “believe” or other variations thereon or comparable terminology. Such statements are not guarantees of future performance or activities.
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