Nickel is languishing around the bottom edge of our comfort zone at $4.2297/lb ($9,474/t).
Oil down around $35/barrel.
Ozzie dollar at 68.4c to the USD
Nickel stocks at LME are through the roof at 76,475t, high for Nickel but lower than other metals except for lead. But the slope on that trend line does not look good...
Buy-Sell in the depth is 4.8m buy to 726k sell or a ratio of 6.7:1, which is very good. Highest buy order is at 12c, lowest sell at 13c, last trade at 12.5c.
ALB was up 4.17% last traded in Oz, up 6.82% in the UK (half a day later).
ALB has risen by just over 100% in three weeks (since the 6th of December). That's a rate of 33%/week.
So, I think 33% per week may have been a response to overselling, but how much overselling was there? Personally, I think that $1.50 sounds like the correct medium term value providing the Nickel price and the cost of production stay close. If they can't get the cost of production down, they say that $4/lb is a realistic target by March, and if the Nickel price slides below $4 with no realistic prospect of recovery, then I would say we are in trouble.
But a lot of Nickel mines have closed in response to the low Nickel price and they all have stockpiles of Nickel that take a month or two to fully exhaust. It is when those stock piles are exhausted that we will see the true situation, which is why the rise in the stockpile at the LME may not be as bad as it at first appears. The true consumption verses production may be far more favourable than consumption verses the availability of Nickel as many of the sources supplying at the moment are not producing, so they will suddenly stop.
It might just be a golden opportunity for a short term punt, the medium term is looking better and the long term appears far more secure.
I wouldn't want to be in a position of having to advise anyone else but me, and I'm advising me to buy some more...but whether that purchase terns out to be a short term windfall, a medium or a longer term investment, only time will tell :)
RoberT
ALB Price at posting:
12.5¢ Sentiment: Buy Disclosure: Held
