LONDON (Commodity Online): The Nickel market confounded almost everyone last year, with expectations for a significant surplus being met instead by a drop in LME stockpiles of 45,000 tonnes, said Natixis Commodity Markets Limited in a Q1 2012 Metals Review.

“We believe that a close examination of the Chinese stainless Steel industry can help to explain this apparent dichotomy. If our analysis of the importance of China’s expanding Nickel pig iron capacity is correct, 2012 risks becoming another phantom surplus,” Natixis added.

That is not to say that nickel prices will rise sharply, but they should be well supported between $18,000-20,000/tonne, suggesting an average for the year of perhaps $22,000/tons.