Some small positive news.
The London Metal Exchange nickel price reached $27,650-27,655/tonne (cash) yesterday, marking the highest level since April 2008. An analyst tells Steel Business Briefing the upsurge is based more on investment buying than on any supply/demand imbalance.
“This is not because of fundamentals in the nickel market but is rather a result of hedge funds buying,” he says. “Nickel has not performed badly but has not been as strong as copper, which has reached its all-time high; it appears speculators are looking to buy something that is on its way to reaching its all-time high”.
Conversely, it would seem that factors such as the Voisey’s Bay nickel mine coming back on stream, as reported yesterday, could prove to be a dampening factor on price rises. Additionally, stainless producers, although seeing some pick-up from Q4, are not overly optimistic for 2011 (see today’s article on Outokumpu).
Stainless steel making accounts for two-thirds of nickel consumption. One respected analyst, Markus Moll of Steel & Metals Market Research, thinks stainless steel production is likely to see a 7% growth during 2011 after reaching a record high in 2010. He was quoted by Reuters yesterday as saying that stainless steel production had increased by 7% to 11.8m tonnes in China and 12% to 2.9mt in India in 2010, compared with 2009.
© Steel Business Briefing
