December 2024 saw a substantial decline of 3% in SMO254 prices in the U.S. spot market due to lower demand. This depleting demand for SMO254, a super alloy made from nickel, chromium and iron, has been on a downward trend since the third quarter of 2024.

Nickel is SMO254’s most volatile raw material and its largest producer Indonesia reported its four-year lowest production capacity. Despite lower production, nickel prices have fallen because the US Federal Reserve's pessimistic outlook has made people less hopeful about interest rate cuts. The connection between nickel prices and SMO254 is crucial, as these fluctuations directly affect overall production costs and pricing strategies for manufacturers in the industry.

Supply of SMO254 remained in murky waters. Indonesia considered reducing mining quotas in 2024 to stabilize falling prices. However, the impact of these cuts was overshadowed by the global surge in nickel supply. This volatility translates into a challenging landscape for SMO254 producers, who are under continuous pressure from raw material costs.

SMO254 is majorly used in the EV and construction industries, both of which have been weak performers. There was a notable slowdown in electric vehicle sales which rendered nickel one of the weakest performers among industrial metals this year. This dip in demand for nickel and fluctuations in its supply, has fostered a cautious market sentiment, which, in turn, reflected in SMO254 prices.

Real estate and construction activities also played a role in the SMO254 market. Reports indicate that U.S. construction spending remained unchanged in November, with minor increases in single-family homebuilding as compared to multi-family housing projects. These dynamics introduced additional factors that influenced SMO254 demand indirectly. While gains in single-family homebuilding were noted, they were not sufficient to compensate for decrease in multi-family projects.

US homes spent an average of 70 days on the market—the slowest pace observed in nearly two years. Moreover, elevated mortgage rates of 6.85% contributed to buyer caution, resulting in an 8.6% month-over-month decline in inventory, marking the largest drop since January 2023.

Despite facing these challenges, the spending figures for construction reflected a 3.0% increase year-over-year, with expectations for slight recovery in 2025 as mortgage rates are anticipated to ease. This recovery could lead to improvements in demand for SMO254 as construction activities pick up.

As per ChemAnalyst, the outlook for SMO254 indicates cautious optimism as producers navigate the balancing act of raw material costs and fluctuating demand. Although December’s decline of 3% in SMO254 prices reflects current market pressures, future trends may stabilize as expected reductions in interest rates and improvements in construction activities unfold in the coming months. Monitoring ongoing developments in the nickel market will be crucial for stakeholders in the SMO254 sector as 2025 approaches.