LONDON, March 20 (Reuters) - Despite a recent correction in prices and speculative profit-taking, the bull market in nickel is far from over, broker Macquarie Equities Ltd said on Monday.
In its weekly report, Macquarie said the turnaround was prompted by a number of short-term factors, such as the Eramet New Caledonia settlement, a small rise in London Metal Exchange (LME) stocks, reports of greater availability of stainless-steel scrap and Russian metal, and resistance at $10,450/10,500 a tonne.
However, this correction should not be seen as the start of a new trend in the market, it added.
Inventory levels are low, and combined LME, producer and consumer stocks stood around 9.4 weeks consumption at the end of February, the lowest since September 1990. Stocks are set to fall even further, Macquarie said.
Demand is booming, with stainless-steel production continuing to grow strongly, while consumers are said to be low on stock.
There is the threat of a strike at Inco (Toronto:N.TO - news), Sudbury, which accounts for around 10 percent of world supply, with its labour contract expiring at the end of May.
Also, the Australian pressure-acid-leach (PAL) operations continue to struggle, and production from these units will be a minor contribition to supply during the first half of this year.
``We foresee further steady run-downs in LME stocks and even without an Inco strike still see $12,000 a tonne as a likely three-month price target,' Macquarie said. |
