Nickel May Surpass $55,000 a Ton This Year, Standard Bank Says
By Debarati Roy
April 27 (Bloomberg) -- Nickel
prices may surpass this year's record as supplies of the metal used to make
steel resistant to corrosion lags behind demand, Standard Bank said.
Nickel may rise above $55,000 a metric ton, exceeding the April 24
peak of $50,200 a ton, Michael Skinner, an analyst at Standard Bank in London,
said in an interview yesterday.
Nickel has more than doubled in the past year because of rising demand
by Chinese stainless-steel and delays to projects announced by miners including
BHP Billiton Ltd. China's output of the alloy used in kitchen sinks may rise 37
percent this year to 7.35 million metric tons, metals research firm Heinz H.
Pariser said March 21.
``It is unlikely supply will be able to match demand before 2008,''
Skinner said in Mumbai. ``People will remain bullish in the short and medium
term.''
A four-month strike by Eramet SA workers in New Caledonia reduced the
company's output by 50 metric tons a day, 27 percent of its 185-ton daily rate,
since Sept. 25. The strike ended in January. BHP said Nov. 30 that its
Ravensthorpe nickel project in Australia will be delayed by as much as a year
as costs rose.
Not everyone's agrees.
Nickel prices may fall in the second half of this year as China may
substitute the metal for cheaper ingredients because of a surge in prices,
Goldman Sachs JBWere Pty. said.
``We are increasingly concerned that brisk growth in low- grade
ferronickel production in China has the potential to return the global nickel
market to surplus from 2008,'' Goldman analyst Ian Preston said in a report
dated yesterday.
Nickel Substitute
The metal will average $16.82 a pound ($37,081 a ton) this year,
according to Goldman. Its forecast ``implies a very sharp price correction over
the next few months,'' suggesting a second-half average price of $14.25 a
pound. Nickel for delivery in three months gained 0.2 percent to $47,100 a
metric tons on the London Metal Exchange, ending three straight days of losses.
China's imports of laterite, a lower grade form of nickel, are
forecast to rise more than 59 percent this year to exceed 6 million tons, from
3.77 million tons in 2006, Xu Aidong, analyst with Beijing Antaike Information
Co., said last month.
Posco, the world's fourth-largest steelmaker, said April 25 it will
increase output of a nickel-free stainless-steel product fivefold by next year
amid soaring prices for the metal. The alloy accounts for about a quarter of
Posco's sales.
Still, the move by stainless steel makers to use little or no nickel
won't immediately curb demand, Skinner said.
``The prices will remain strong since it will be a while before the
substitution effect can be felt,'' he said.
To contact the reporter on this story: Debarati Roy in Mumbai at
[EMAIL PROTECTED]
Last Updated: April 27, 2007 04:03 EDT
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