UK: NICKEL'S BULL RUN AT AN END - ANALYSTS.
9 Jun 2000 14:38GMT
LONDON, June 9 (Reuters) - The bull run in nickel is over and while the market will be in overall deficit by year-end the peak for demand has passed, said analysts.
"The nickel market is moving into surplus as the year goes by...we are through the period of deficit in the first half...the game is over," Jim Lennon of Macquarie Equities told Reuters. Lennon said the market was starting to factor this into the price.
On Friday London Metal Exchange (LME) three months nickel was trading at $8,200 a tonne, down two percent on Thursday's close, and 20.7 percent down from five-year highs of $10,350 in March.
"While we could get a short term bounce to $9,000, to get beyond that we will need a major supply disruption," Lennon said.
In a report out on Friday Roy Carson of LME brokers Scotia Mocatta a division of the Bank of Nova Scotia said the bull run in nickel was over.
Scotia's long-term price projection was $7,000/$7,500 ($3.15/3.4 cents a lb).
"Positive factors still remain for nickel post the Inco (labour) deal. Among the most important are the Falconbridge negotiations and the continuing stock declines," said Roy Carson of Scotia Mocatta in a report.
"But the former should be settled without a dispute, while if the latter continues, it will increasingly support the cash and the spread backwardation rather than the three month prices," Carson said.
Major Canadian nickel producer Falconbridge's labour contract at its Sudbury operation expires on August 1. Fellow Canadian producer Inco Ltd reached a new three-year deal with its Sudbury workers earlier this month averting a much-expected strike.
Lennon said he was forecasting prices of $4.25 a lb in 2000 and $3.00/3.50 a lb in 2001 when he said there would be a 15-20,000 tonne nickel surplus.
On Friday LME stocks were at an eight year low of 21,750 tonnes.
((Camila Reed, London Commodities tel+
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