Some comments from Rio Tinto and CIBC World Markets, excerpted from an article by Danny Deadlock (dated 1/21/08), confirming what other analysts are saying about continued strong demand for nickel, despite a U.S. recession:
With 40% of the world's population, India and China will continue to fuel demand for natural resources and offset the concern we're seeing from a U.S. slowdown. Rio Tinto's CEO in a speech this week said China is increasingly decoupled from the U.S. and the Asian powerhouse would still grow at about 10% in 2008 even if the U.S. went into recession. They expect growth in China near 10% in 2008 and sustained growth of 9%. On top of this, few are even thinking about India but it won't be long before this country of a billion people starts to have a profound impact on the consumption of raw materials.
“Whether the U.S. is heading for a recession or just a mid-cycle slowdown remains to be seen,” CIBC World Markets chief economist Jeff Rubin wrote in a report Friday. “But the more important question for crude, base metals, and other resource markets, is whether it really matters any more.”
According to reports, during the last five years American consumption of zinc and copper has dropped, while aluminum and nickel has remained flat. During that same time period, demand from China jumped 20% and, as a result, we've seen record high commodity prices. Any slowdown on the demand for raw materials from the U.S. will be more than offset by demand from China, India, Russia, Brazil and the Middle East (our New Economy).
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