Nickel at 19 years high, but juniors have barely moved as they langish in the summer doldrums.!!
Nickel rises to 19 year-high on LME as stockpiles decline, major concern for stainless steel makers
United Kingdom - 2006 July 18
Nickel rose to its highest in at least 19 years as stockpiles shrank, curbing supply of the metal used to make stainless steel.
Nickel stockpiles tracked by the London Metal Exchange fell 120 tons to 6 462 tons, the lowest level since May 18 2005, the LME said today in a daily report. Inventory may be used to fill a forecast production shortfall this year. Credit Suisse Group said last month in a report that nickel demand in 2006 will beat output by 15 000 tons.
Nickel “certainly is being supported by fundamentals”, said Adam Rowley, an analyst at Macquarie Bank Ltd. in London.
Nickel for delivery in three months on the London Metal Exchange rose $1 200, or 4,7%, to $26 800 a ton as of 10:30 am London time. That's the highest level since at least 1987, when Bloomberg data begins. The price has almost doubled this year.
Most nickel is used to make stainless steel. Chinese stainless steel production will rise more than 25% to 4,7-million tons this year, boosting demand for nickel by 35 000 tons, or half the projected increase in global demand, Beijing Antaike Information Development Co. analyst Xu Aidong said July 7. Global nickel use may rise to 1,33-million tons this year from 1,26-million tons last year, she added.
Of the 6 462 tons in LME warehouses, 3 594 are under “canceled warrants”, which means the metal has been bought, according to LME data.
“That leaves less than 3 000 in warehouse and available,” said Rowley. These levels are “incredibly low”, he added.
Among other LME metals, aluminum fell $73 to $2 553 a ton, tin dropped $200 to $8 575, zinc declined $35 to $3 410 and lead slipped $5 to $1 130.
Copper dropped $155 to $7 925 a ton after Grupo Mexico SA resolved a strike at its Cananea mine and will restart operations for the first time since June 1.
The Mexico City-based company agreed to pay 50% of lost wages during the strike, according to statement from Mexico's miners union. Cananea, the country's largest mine, produces about 150 000 tons of copper a year, or almost half the company's Mexican output of 325 000 tons.
Strikes at Cananea and the company's La Caridad mine since March reduced global supply and helped drive prices to record highs this year. Miners continue to strike at La Caridad, which produces about 140 000 tons of copper a year.
“News that workers are going back, that the strike is coming to an end is probably why prices have eased off a bit,” said Rowley.
Source: Mining Weekly
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