Xstrata's Mick Davis `Bullish' on Outlook for Stainless Steel By...

Xstrata's Mick Davis `Bullish' on Outlook for Stainless Steel

By Brett Foley

Oct. 29 (Bloomberg) -- Mick Davis, chief executive officer of Xstrata Plc, the world's fourth-largest nickel producer, said he is ``bullish'' on the outlook for stainless steel.

The company said today it would offer $2.9 billion to buy Jubilee Mines NL, Australia's fifth-largest nickel company. Nickel is mostly used to make stainless steel. He also commented on coal prices. He spoke in a conference call today in London.

On stainless steel demand:

``We are bullish on stainless steel. It remains the outstanding growth commodity. It has been for some years and we see no reason why that will change.''

On production of so-called nickel pig iron in China:

``At a certain level, deriving nickel from low-grade ores through this process yields an advantage, and below a certain price that advantage fades away. Some of our colleagues were in China and saw (nickel) ore on the wharves that had not been collected for processing due the relatively low nickel price at the time. There is a floor that is built into the nickel price for this kind of production, and that floor is around about $25,000 a ton to $28,000 a ton.''

On the Jubilee acquisition:

``It is an excellent bolt-on transaction for Xstrata's nickel business. It is an important nickel province for us to have access to.''

On forward selling nickel output:

``We have taken no hedges and have no intention of doing so.''

IF ITS GOOD ENOUGH FOR MICK, THEN I TOO AM REMAINING BULLISH!