NICKEL-Major market developments in November
LONDON, Dec 10 (Reuters) - Rising nickel stocks are a concern
and while demand may pick up from current sluggish
levels early next year, the market will move into surplus
after that as new supply starts to weigh, analysts say.
"Demand is very sluggish right now, exacerbated by the
seasonal slowdown," said Vanessa Davidson of industry
consultants CRU Group.
"While it should be better in Q1, there's a question over
supply with lots of new projects coming on-stream," she
added.
Even if some of those operations experience delays there
will also be an additional 80,000 tonnes of metal from
Vale's Sudbury operations. That metal was lost to the market
this year due to a prolonged strike there, which has
since ended.
Independent consultant Angus MacMillan expressed concern
about the large amount of metal still stored in London
Metal Exchange (LME) warehouses.
On Friday they stood at 131,184 tonnes, up from the year's
low point of 115,668 tonnes seen in mid-August
MacMillan expected slow demand from the key stainless
steel industry, high inventories and rising output to exert
downward pressure on prices.
The LME three-months nickel price was last indicated at
$23,800 a tonne. For an interactive graphic on monthly
stocks and prices:
r.reuters.com
"It's interesting to see that a lot of producers tend to sell
into the rallies. It suggests they don't see a huge amount of
upside for nickel," said Standard Chartered analyst Daniel
Smith.
Below are some of the more significant recent developments
in production, stocks and prices that may continue
to influence the direction of the market in the remainder of
2010 and into 2011.
PRODUCTION:
Nov 18 - Vale SA plans to spend more than $10 billion over
the next five years to expand its operations in Canada. The
company said the large-scale investments have already
started and will ramp up during 2011. Vale plans to spend
$3.4 billion to upgrade its mining and processing facilities
in Sudbury, Ontario, while spending about $2.8 billion to
build a nickel-processing facility in Newfoundland and
Labrador. But in the province of Manitoba, where it plans
to phase out smelting and refining operations by 2015.
Nov 16 - Two major nickel producers, New Caledonia's Societe
le Nickel (SLN) and Xstrata , unveiled major new expansion
plans. Both companies revealed plans to bring on
annual output totalling more than 10,000 tonnes over the
next few years.
Nov 15 - Brazil's Vale unveiled plans to start shipping
nickel from its troubled $4.3 billion Goro project in New
Caledonia, two years behind original schedule and only in
semi-finished form.
A senior company executive said the project would ship at
least 4,000 tonnes of semi-finished metal to Australia
from next month, but he stressed that Vale was sticking to
its long-term goal of ramping up Goro to 58,000 tonnes a
year.
Nov 11 - China produced 162,246 tonnes of primary nickel
in the first ten months of the year, up 15.4 percent from the
same period last year, according to the National Bureau of
Statistics.
PRICES
Nickel prices ended November slightly firmer at $23,050 a
tonne from $22,990 at the end of October.
Buoyed by LME benchmark copper's early strength threemonths
nickel rose to $24,849 a tonne on Nov. 5. The market
held on to most of those early gains until copper fell on
a stronger dollar and signs of monetary tightening in
China.
By Nov. 17 the market had fallen to a near-three month low
of $20,450 a tonne. But prices bounced from there on supply
worries, including tensions in Madagascar where a new
sizeable nickel project is due on stream early next year.
After that prices remained on a general uptrend from those
lows, boosted at times by new record high copper prices.
In July, the twice-yearly Reuters base metals price poll put
the median average for the LME cash nickel price at
$20,225 a tonne, up from the January forecast of $18,186 a
tonne.
STOCKS
While it was not all one-way traffic, LME nickel stocks remained
on a general upwards tack in November.
They ended the month at 131,802 tonnes -- their highest
since around mid-June -- up from 128,160 tonnes the previous
month.
In August, LME stocks were below 116,000 tonnes, down
more than 26.0 percent from the start of the year.
At the end of November they amounted to more than 34
days of consumption.
3000 Xtra users can access Reuters Metal Production Database
(MPD) by clicking on:
bond.views.session.rservices.com |
