Nickel hits 5-month peak, partly on China demand Fri Mar 4, 2005 07:07 AM ET By Martin Hayes LONDON, March 4 (Reuters) - Nickel, mainly used in stainless steel, hit a five-month peak on Friday as warehouse inventories fell, partly due to China's huge appetite for raw materials.
News for GMKN.RTS COPPER-Major copper market developments in February Nickel hits 5-month peak, partly on China demand COPPER-Major copper market developments in February
"These stocks keep on going down -- that is what is underpinning it. That, and the fund buying we have seen," one trader said. On the London Metal Exchange (LME), the world's largest non-ferrous metals market, three months (MCU3: Quote, Profile, Research) prices were at $16,100/16,200 a tonne, close to Thursday's $16,300, which was the highest since last October.
The price is edging up towards its 15-year peak of $17,720 of January 2004 as inventories fall and the market talks of the relatively high price having an impact on demand.
LME warehouse inventories fell 168 tonnes to 9,414 tonnes, the lowest since August 2004, having fallen almost without interruption from January levels of 20,000 tonnes.
Stocks are seen continuing to fall in the short term. There are some 3,000 tonnes of metal under cancelled warrant -- metal earmarked for removal. The stockpile may fall back to July 2004 levels of 7,800 tonnes, which was the lowest since August 1991.
STOCKS BEING USED UP
Stainless steel accounts for some two-thirds of nickel consumption and its use is growing in China as the country's industrialisation powers on relentlessly.
"Chinese stainless-steel production alone is expected to grow by 750,000 tonnes to 3.5 million tonnes in 2005," broker Standard Bank London said in its March review.
Traders said the market, which was near balance in 2004, faces a shortfall in 2005, as production increases will not kick in until nearer the end of the year.
Canada's Inco (N.TO: Quote, Profile, Research) expects its production to be lower this year -- the first shipments from its Voisey's Bay project are not due until the final quarter. Russia's Norilsk (GMKN.RTS: Quote, Profile, Research) has said its supply will fall also on environmental grounds.
But some traders said the relatively light level of physical activity recently suggests that some metal is being transferred to other warehouses, in anticipation of future consumption.
"Some of that metal will go back in (registered) again. What is happening in nickel is institutional money moving into commodities," another trader said.
"It is not a $16,200 market," he added, suggesting that fundamentals alone did not justify the high price.
HIGH PRICE A THREAT TO DEMAND
Analysts said consistent high nickel prices pose a threat on the demand side, as alloy-makers will look for alternatives.
"The high cost of nickel-bearing stainless is prompting users to consider alternatives and, in some cases, to switch to other cheaper materials," industry specialists MEPS said in a report this week.
Benchmark hot-rolled plate 304 series stainless steel prices rose strongly in 2004 from a January level of $2,117 a tonne to December's $2,935. MEPS said European mills have also reported end-users switching to lower-cost nickel-free or low-nickel specifications -- some customers may have quit stainless entirely.
"Stainless producers say they think a 'reasonable' level for nickel would be $10,000/11,000 per tonne in the medium term. Under the impact of increasing substitution and growing supply, this may become a reality sooner than many had expected," it said.
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Comments,,,,
The 2004 Nickel Market was not in balance but deficit.
Destocking from users & scrap dealers have created an illusion of balance but destocking can only happen once before restocking must take place.
Fundaments suggest that Nickel is trading 50% lower than price levels seen in 1989. Inflation is why.
Nickel Substitution took place in 2004 on a grand scale due to higher Nickel Prices. It's old news.
Just about everybody who could substitute Nickel with an inferior product already has.
It's the same old story, Nickel over $7us/lb & "experts" start talking about substitution.
Well Nickel is over $7us/lb for the 4th time in less than 15 months, substitute or shut up & stop whinging.
$10,000-$11,000us tonne($4.53us/lb-$4.98us/lb) is apparently what stainless steel producers think is fair.
LMFAO
The vast majority of Stainless Steel producer made ALL TIME RECORD HIGH PROFITS last year. 2004. Despite Nickel Prices.
Really it's a joke.
I asked someone the other day at the local service station what they think about current Petrol Prices.
They said 75-80 cents in the medium term would be "reasonable".
LMFAO, yeah I would like that too.
Reality dictates different.
The new Airbus from Europe will make all the difference regarding Nickel Prices.
The blades in the propeller have a much higher Nickel content then Boeings Aeroplanes(over 67% Nickel).
Make them out of Magnese, save heaps of money.
Lol, you want to fly in the low Nickel Plane???????
Porsche once used the slogan,,
"there is no substitute"
What they meant is there is no substitute for quality.
Unless a new Element is found(an addition to the periodic table), then Nickel will stay in high demand & the people that don't like it can go jump.
It's simple really.
Cheers.
ASX Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)