Nickel users steeled for higher prices
As stainless steel output soars in Asia and cutlery production goes into overdrive, the price of nickel has hit new records in recent weeks. With supplies of the base metal dwindling to less than one day of global consumption, nickel for immediate delivery recently broke through $27,000 a tonne on the London Metal Exchange.
Inevitably, China is responsible for much of the demand – in particular its stainless steel manufacturers, since stainless steel production accounts for 70% for nickel use. Xu Aidong, an analyst for Beijing Antaike Information Development, said on Bloomberg.com that worldwide demand could rise to 1.33 million tonnes this year, against 1.26 million in 2005. Chinese stainless steel producers are likely to account for half of this increase, as they push output up by more than 25% this year to 4.7 million tonnes. Nor is there any prospect in the short term of Russia’s Norilsk Nickel, the world’s biggest nickel and palladium miner, being able to meet the increase in demand.
Mining commentator Peter Grandich, editor of the Grandich Letter, sees low inventories continuing to power nickel to new heights. He’s also bullish on zinc, although he expects a sharp correction in the price of copper.
