Nickel Climbs to Record for 6th Consecutive Session on Supply
By Chanyaporn Chanjaroen
Jan. 24 (Bloomberg) -- Nickel climbed to a record for a sixth consecutive session in London on continued concern that supply of the metal used in stainless steel won't meet demand this year. Tin advanced to an 18-year high for a second day.
Workers at Xstrata Plc's Sudbury nickel unit in Canada may strike if a new labor contract isn't agreed by the end of January. Talks made ``slow progress,'' Rick Grylls, a spokesman for the union representing over 1,000 workers at Sudbury, said yesterday. There was a deficit of 80,000 metric tons in January- November, according to the World Bureau of Metal Statistics.
``Nickel tightness is very real,'' Neil Buxton, managing director of GFMS Metals Consulting Ltd., said in a phone interview. ``The industry can't take up the shortfall.''
Nickel for delivery in three months was unchanged at $37,800 a ton as of 12:38 a.m. local time. The metal earlier traded at $38,502, beating yesterday's record by $202.
Prices have more than doubled in the past 12 months as production of stainless steel in China, the world's fastest- growing economy, expanded almost 50 percent last year, Buxton said. Consumers may slow purchases if prices rise to $40,000 a ton, he added.
Workers at Xstrata's mines in the Sudbury area have threatened to walk off the job on Jan. 31, when their current labor agreement expires, without a new contract. They voted to allow a strike on Jan. 16. The Sudbury mining and smelting complex produced 19,708 tons of nickel in 2005, 23,367 tons of copper, and 345 tons of cobalt, the company's Web site said.
Smelter, Refinery Disruption
Nickel also increased after Eramet SA, which owns the world's largest ferronickel plant, reduced output by 27 percent due to a strike in New Caledonia that lasted nearly four months until last week. Eramet produces about 5 percent of global nickel supply.
Production from BHP Billiton Ltd.'s Kwinana nickel refinery will fall this year. A planned maintenance shutdown for 21 days in the first quarter probably will lower output to 60,000 tons this year, from 62,000 tons in 2006, BHP Billiton spokeswoman Emma Meade said Dec. 12. There will be a market deficit of 57,000 tons in 2006 and 2007, the Australian company said.
Stockpiles of nickel tracked by the LME dropped 48 tons, or 1 percent, to 5,016 tons, the exchange said today. That's the lowest since Oct. 20. The amount of metal booked and due for delivery from LME-monitored warehouses, known as cancelled warrants, jumped 47 percent to 1,902 tons, accounting for 38 percent of total inventories.
Tin climbed $250 to $12,400 a ton. Earlier, it traded at $12,500, beating yesterday's 18-year high by $1, on concern that supply from Indonesia, the world's second-largest producer of the metal, may drop as the country tightened export regulations.
Tin High
The Indonesian government this week signed a decree ordering miners to register within one month for the right to export tin. Production at PT Koba Tin, the country's second- largest producer, probably will fall this year as the company said today it halted ore collection from small miners while the police checks if the company is sourcing the raw material from outside its contract area.
Koba Tin secures tin ore from small miners operating within its mining leases, Malaysian Smelting Corp., which controls 75 percent of Koba, said today in a statement. That supply will account for about half of the company's estimated 17,000 tons of output this year, Malaysian Smelting said.
Among other LME-traded metals, aluminum rose $17 to $2,832, copper gained $70 to $5,730 and lead added $29 to $1,702. Zinc advanced $60 to $3,760.
To contact the reporters on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
Last Updated: January 24, 2007 07:43 EST
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