London. Nickel has gone from bull hero to zero in the space of just a couple of months.
In early March, when London nickel was trading above $11,000 per ton, it was the best performer among the major base metals traded on the London Metal Exchange (LME).
At a current $9,510 per ton, it is now down 4 percent on the start of the year and vying with tin for worst performer.
Early exuberance has run aground on the shifting sands of politics in the Philippines and Indonesia, two suppliers of nickel raw materials to China's massive stainless steel sector.
What seemed a straightforward narrative of supply shortfall has become ever problematic in recent weeks.
The International Nickel Study Group (INSG) is still forecasting a supply-usage deficit this year but it has just trimmed its expectations and adjusted its deficit calculation for 2016.
Moreover, even if the INSG's assessment of a 40,000-tonne production shortfall this year proves correct, there is the not so little issue of stocks, both in LME warehouses and in China.
The bull narrative for nickel appeared clear cut.
Indonesia, previously the major supplier of nickel ore to nickel pig iron (NPI) producers in China, had stopped all shipments at the beginning of 2014.
The Philippines, which emerged to fill the resulting gap, then generated a second supply shock in the form of eco-warrior turned environmental minister Regina Lopez.
Lopez ordered the suspension or closure of almost half the country's mines, many of them nickel producers, on charges of environmental degradation.
The impact is already showing in China's trade figures.
Shipments of nickel ore from the Philippines drop over the October-March rainy season every year but the amount of material imported in the first quarter of this year, 2.32 million tonnes, is the lowest since 2012, when the country was still a second-tier supplier after Indonesia.
However, just when trade flows seem to be confirming nickel's bull credentials, the narrative is starting to unravel.
Affected nickel producers in the Philippines are fighting back, both legally and politically, and Lopez' future is far from certain with a showdown looming in the form of the firebrand's Senate confirmation hearing on Wednesday.
Events in the Philippines, though, have been overtaken by those in Indonesia.
Because Indonesia has part reversed its ban on ore shipments by allowing some producers, first and foremost Aneka Tambang , to export stocks of nickel ore.
There was a suggestion that shipments had already resumed but the 300,000 tonnes of Indonesian ore that apparently landed in China in January and February seems to have been a misclassification by the Chinese customs authorities.
Not so with the 50,800 tons of ore that has just arrived at the Chinese port of Lianyungang in the province of Jiangsu, according to local specialist news service Shanghai Metals Market. The shipment, made by Zhenshi Holding Group, is the first official arrival of Indonesian ore since the January 2014 ban, according to SMM.
More will come.
Aneka Tambang is sitting on over five million tonnes of nickel ore and has just applied for an export license for an additional 3.7 million tons over and above the 2.7 million that have already been approved for export.
Remember that these exports will supplement the ever-growing amount of nickel pig iron that is now being exported from Indonesia to China thanks to the build-out of processing capacity in the country.
That was, after all, the purpose of the original ban, and the resulting flow of interim product continues to increase, more than doubling to 232,000 tons in the first quarter.
Smaller Deficit, Big Stocks
Given such startling shifts and turns in the raw materials story, pity the statisticians at the INSG who have to try and weave a coherent overview of what is happening in the nickel market.
The Group has just issued its latest assessments, tweaking the production side of the balance sheet higher.
As a result, the supply deficits of 67,000 tons and 66,000 tons calculated for 2016 and 2017 at the time of its last meeting in October have been trimmed to 38,000 and 40,000 tons respectively.
Whichever figure you want to take, these calculated deficits are small relative to the size of global nickel stocks.
The amount of nickel sitting in the LME warehouse network currently stands at 379,182 tons. Last year's downtrend, which saw inventory fall by 69,000 tons, has dissipated. Indeed, LME stocks are now up by over 7,000 tons on the start of the year.
It is true that those registered with the Shanghai Futures Exchange have declined by almost 9,600 tons to 84,334 tons.
But the ebb and flow between London and Shanghai stocks seems to reflect little more than the shifting arbitrage between the two markets.
Taken in the round, total visible stocks at a current 463,500 tons are largely unchanged on the start of the year.
There may, moreover, be a significant amount of legacy stock sitting in the statistical shadows beyond the reporting reach of the exchanges.
All About Ore?
Nickel's bull story was all about the supply of ore to China and hence dependent on a continued Indonesian ban and a mass shutdown of mining capacity in the Philippines.
With Indonesia now effecting a partial about-turn in export policy and the state of Philippine play still highly uncertain, a previously straightforward narrative has become increasingly complicated.
But the real problem for nickel bulls may have been the collective focus on just one strand in the supply chain.
The more collective hopes were pinned on the disruption of nickel ore as a determinant of future price, the less incentive anyone else had to trim production during the long price decline that took place between 2011 and 2016.
Nickel, it turned out, was surprisingly price inelastic and that, as much as the vagaries of ore supply politics, may yet turn out to be the real hindrance to higher prices.
Whatever the statistical niceties of this year's supply-demand balance, the final figure is still going to be dwarfed by the amount of stocks accumulated over the last few years.