Lucky
Firstly, “I am just a simple man trying to make my way in the universe”. I do what I do to trade Nickel stocks. Secondly, if anything comes of Lithium, it will be a miracle and is not in my POS calculations.
First of all Copper has done its good work over the past few months and anything over $7,000/t is an excellent result. Don’t worry too much about daily changes in LME because from what I can ascertain producers are moving their Copper stocks quickly to the warehouse trying to take advantage of the current high prices. Eventually they run out until they produce more.
Note; there are Producer stocks, LME warehouse stocks and Manufacturer stocks. At the height of the Nickel glut the Vale MD estimated that there was 800,000t of nickel in the pipeline and now there is less than 500,000/t. Do you own maths but non-LME Nickel over the past couple of years is 40% of what it was. That means
if a further 60,0000 deficit is forecast for 2018 then it will more than likely come straight out of the LME stockpile as Manufacturers and Producers are already running lean.
Anyway back to N4 which is the establishment of more traditional Ni/Cu ratio for many reason already described in detail previously. At CP = $7,000/t, NP historically should be > $20,000/t (ratio of 1 on graph). Currently they are @ $7,000/t and $13,000/t. I would be happy with somewhere in between in the short to medium term at around $16,000/t @ CP = $7,000/t. See monthly graph below.
View attachment 936793
Note, if copper goes higher than $7,000/t all the better.
POS wages and outgoings are not paid in American Dollars. So required Nickel start up prices must be defined in $AU.
PAN are happy to restart operation @$AU16,000/t, POS @ $AU17,000/t and MCR @$AU18,000/t. Of course they would like to be sure that those prices will hold so it is not an automatic turnkey. PAN has decided to begin the process of a restart but does not have to totally commit till March. Current NP $US13,000/t or $AU16,200/t. POS would like to see $AU17,000/t before even starting the process. See daily $AUNP Below.
View attachment 936805
POS SP probability is determined by the $AUNP. It is really hard to determine the actual price of what POS would be if all the boxes where ticked for a start up to begin because it has never happened before. But that still does not preclude the ability to predict the SP from the $AUNP using historical data. Allowances need to be made for extra shares and the constant Pershing dumps that have clearly lower the real SP compared to the NP probability SP. Current my estimate is 9.8c
RED
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