ELWhat happens if stocks of Ni stay above 16,000 tonnes on a...

EL

What happens if stocks of Ni stay above 16,000 tonnes on a consistent basis. Do you think the PON will then fall to around $US10 or less I have looked at the LME charts on Kitco, which suggests stocks have not been this high since about May/June 2006 when the PON was around $US10. At present LME stocks are over 17,000 tonnes. With the current higher costs and the appreciation of the $A from $US0.75 to $0.85 the returns for local producers would be lower now than in June 2006

Its not clear to me that steel producers will necessarily come back to buying Ni to the extend that they did at the higher prices from what I have read on the internet sites.

MCR should still be profitable, but the high profits will be gone.

WSA keeps reporting more Ni finds, as do others and total Australian production will be ramped up rapidily over the next 3 years. There seems to be a lot more Ni to be added to supply from other sources overseas.

I am a bit wary of Ni, given the past history of booms and busts in commodity markets.

If there are clear signals that Ni stocks are falling then I may buy Ni shares, but despite the quality of these shares I am reluctant to risk it now.

Looks like Tricha was right about the Ni price some 6 weeks ago (I think it was). Realistically the Ni price could retrace to $US8 and stay there for some considerable time.

I guess, if one took a very long term view than buying, say WSA shares, should be fairly safe becuase they are likely to have very high level of deposists and at some stage in the future we are likely to get another significant increase in the PON. However, this means sitting on an investment for a long time with an uncertain payout date.

My last Ni shares to be sold were WSA, and I posted on that thread an article that clearly indicates Ni was way over-priced and only had a long term average price of less than $US5. I guess that figure is in nominal dollars, not constant dollar value.

Loki