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Nickel Forecast Raised by Credit Suisse on Stainless Steel Use

By Jae Hur

July 11 (Bloomberg) -- Nickel cash prices may average higher than forecast this year as stainless steelmakers resume purchases, Credit Suisse Group said.

Nickel may average $17.97 a pound ($39,617 a metric ton), up from a previous estimate of $15, analysts including Jeremy Gray at the bank said in a July 6 report. The metal has averaged $19.91 so far this year.

Spot nickel has fallen 40 percent from a record in May as stainless steel producers used less nickel or cut output. Credit Suisse expects nickel prices to rise in the fourth quarter.

``We estimate global stainless steel output to increase approximately 5 percent in 2007 and 6.6 percent in 2008,'' the analysts said. They expect nickel demand to gain next year on increased usage in batteries and the aerospace industry.

Nickel for immediate delivery fell $1,750, or 5.1 percent, to end at $32,805 a ton yesterday. The price reached the record in May as stockpiles plunged to an amount equal to less than two days of global consumption following strong demand in China.

Credit Suisse also raised its 2008 nickel forecast by 36 percent to $15, 2009 by 38 percent to $11 and 2010 by 33 percent to $8. These compare with estimates by Jon Bergtheil, head of global metals strategy at JPMorgan Securities Ltd., made on July 8, for $17.95 pound in 2007, $12.48 in 2008, $8.51 in 2009 and $6.45 in 2010.

``We estimate a finely balanced nickel market through until 2009, with marginal surplus supply (of) refined nickel estimated at 1 percent of global consumption in 2007-2008,'' the analysts said.