As expected by Meps, the EU Average Cold Rolled Coil type 304 transaction price moved down in October by 3%. This was due to further declines in alloy surcharges. Buyers remain cautious about placing forward orders. As such, mills may struggle to increase basis values significantly before early 2008. In addition to that, the EU Average Cold Rolled Coil type 316 transaction price also reduced in October. However, the drop was higher at 6% due to the greater impact of the nickel price decline on the alloy surcharge for this product. Producers have recently recovered some of the basis premium over type 304 which fell dramatically in July. The difference at that time slumped to a ten year low of just EUR 238 per tns but should return to around EUR 380 over the next few months. The monthly average cash nickel price moved up in October, ending marginally lower than anticipated. Inventories continued their steep ascent, rising 13.6% since the end of September. However, the rate of increase slowed considerably over the last week of the month. In the short term, nickel values are likely to remain relatively stable due to high stock levels in LME warehouses and seasonally lower demand in the stainless market during the fourth quarter.
