05.13.09
Nickel price run downplayed by analysts
More miners continue to cut nickel output
By Tom Stundza — Purchasing, 5/13/2009 10:01:00 AM
The recent run-up in spot nickel prices on the London Metal Exchange (LME) to a month-to-date average of $5.83/lb comes from speculative investments rather than from an increase in nickel demand, according to analysts at Macquarie Bank. Therefore, they add, the three-month price of $6.08 reached in futures trading this week probably is unsustainable.
Current nickel prices are well below the cyclical high of $23.65 hit in May 2007 and probably won’t inflate much until stainless steel production worldwide recovers. But that probably won’t happen until 2010 since forecasters believe world stainless steel production this year will be less than the 25.91 million metric tons produced in 2008.
A Reuters News story says a ballooning nickel surplus of more than 110,000 metric tons now sits in LME warehouses and has undermined attempts by suppliers to bring the market into balance by cutting output.
