Currently 7,800 tonnes inventory at LME, and without much fanfare Ni has spiked to $7.25 lb.
kitcometals.com
Nickel buoyed by supply constraints - Standard Bank
Wed July 7, 2004 8:22 AM GMT+02:00
JOHANNESBURG (Reuters) - World nickel prices are set to resume their ascent as demand outstrips supply, but zinc prices would fall given output rises that are likely to exceed consumption, Standard Bank said on Tuesday.
Standard Bank analyst Robin Bhar told a presentation in Johannesburg that nickel prices were likely to average $14,440 a tonne this year and climb to $15,000 in 2005, compared with $9,622 in 2003.
The metal closed at $15,550 on the London Metal Exchange (LME) on Tuesday. Nickel prices have been volatile this year -- moving as much as $2,000 in one day -- and Bhar said he expected this to continue given fund interest and low stocks.
"The fourth quarter of this year is the kind of time I would look at for the nickel price to start rallying again," he said.
A deficit of 41,000 tonnes of nickel is predicted for this year and 35,000 tonnes next year, compared with a deficit of just 4,000 in 2003.
Much of the growth is expected to be fuelled by China's continued voracious appetite for stainless steel, which accounts for around 70 percent of all nickel use worldwide.
"Stainless production is booming and will continue to boom in China," Bhar said.
He said few greenfield nickel projects were expected to come on stream before late 2005 and forecast either physical shortages of the metal in 2004/05 or extreme tightness, with LME nickel stocks very low.
Zinc stocks, by contrast, were high and the arrival of more smelters this year would help to cap prices.
"We don't think production cuts have been anywhere near enough significant to rebalance the market," Bhar said.
He forecast zinc prices at $1,036/tonne in 2004, falling to $990 in 2005. Zinc closed at $1,000 on the London Metal Exhange on Tuesday.
However, the outlook for zinc prices was stronger in the longer term given a deteriorating Chinese power situation, which would require increased investment in metals like zinc.
"The underlying trend in Chinese metal demand is to remain strongly positive in coming years," Bhar said. |
