nickel

Near-term nickel supply unlikely to stem demand

Monday, April 23, 2007

The price of nickel is expected to rise beyond its current stratospheric level as new supply due later this year will fail to satisfy a growing need for the metal in stainless steel, jet engines and hybrid cars, analysts said at the Institute of Scrap Recycling Industries' spring conference in New Orleans.
"We're likely to see upside price risk for the next two quarters with some of the price pressures alleviated by the end of the year," said Jason Schenker, economist at Wachovia Corp.

Schenker forecast a 2007 average benchmark London Metal Exchange price of US$43,309 (HK$337,810.20) a tonne, slipping to a US$36,000 average in 2008 with the addition of new supply. Meanwhile, he said he looks for shortages in the face of current robust demand to send second and third quarter averages to US$46,000 a tonne, nearly twice the 2006 average.

LME nickel soared to an all-time peak of US$50,150 a tonne last week and closed Friday at US$48,700.

New supply anticipated by year end or early 2008 will probably be insufficient to stem price gains, analysts said.

Seven large development projects are scheduled to add about 250,000 new tonnes of nickel a year by 2010, but mines set to have opened by now have been fraught with construction, environmental and other delays.