Monday, May 28 Too highlight the uncertainty in the market, our...

Monday, May 28

Too highlight the uncertainty in the market, our weekly poll of Chinese analysts published by Shanghai Nonferrous Metals shows forecasts of growth versus loss nearly dead even. Of 34 analysts polled, 14 (41%) believe the price of nickel will rise this week, 16 (47%) believe the price will fall, and 4 (11%) believe it will end where it starts.

and

Weekend Review, May 26 & 27

Bombarded with bearish forecasts, for nearly 3 weeks straight, the market finally buckled to the pressure. It will be remembered as a week that put the market into a major corrective mode, or just another bleep in an otherwise bull market continuation. We tend to believe there is some truth to both. Unless China locks up their doors and takes the summer off, the bull market will continue. But we also agree with those who feel the market is due for a major correction. The price increases the nickel market has experienced this year, and specifically in February, have been dramatic, and there is evidence surfacing that threats by the stainless steel industry of old, are now becoming reality. Change is something industry generally resists. But when any product reaches a point where its economical value is questioned, then considerations for change become practical. Stainless steel customers were groaning in early 2006, when the price of nickel was double its low of 2001, and surcharges were nearing the base cost. In late 2006, they were complaining when nickel had doubled again, and surcharges became higher than the base price. Now that nickel has nearly doubled again, and surcharges are double the base cost, they are angry. And stainless steel producers know that anger is a prime motivating factor for change, second only to a reactionary response to a competitor's change. As we stated last week, the nickel industry knows this, but at the moment, is too busy trying to keep up, to care. There is tons of money to be made, and like historical cycles of past, there will be time for PR when supply finally exceeds demand. There is little evidence that is happening anytime soon.

and

Stock analysis by Galaxy Securities for Taigang Stainless Steel - (translated online, but you'll get the point) "Although nickel price increases contributed to nickel stainless steel prices continuing to rise, the escalation of consumption among domestic high-end clients including petrochemical, automotive, liquor and other industries, can still digest nickel stainless steel price increases. Meanwhile nickel stainless steel price increases driven non-nickel stainless steel market sales brisk." In another article on the company and posted on China Finance Net - Taigang estimates the ratio of 400 series to other types of stainless they will sell will climb from "31% in 2006, to 40% this year". And more interesting forecasts for the stainless steel industry as a whole in China.

and

Behind The Big Nickel Bidding War - "No wonder Norilsk Nickel and Xstrata are fighting over LionOre Mining International; according to the international investment bank, Credit Suisse, world nickel prices could continue to rally and even reach $US65,000 a tonne this year." - article here (we would be surprised if the little blurb we posted Friday doesn't get some more attention in the coming weeks - "Kommersant - Norilsk shareholder and former CEO Mikhail Prokhorov, the only board member to vote against upping the bid for LionOre, thinks a deal on such terms is too risky for the Russian mining giant". Takeovers are a generally a positive sign for long term commodity prices, but when a company executive of this caliber disapproves of a takeover, it could be seen as bearish.)

and

Possible problem on the horizon for Xstrata in New Caledonia? On May 6, Radio New Zealand mentioned a study that had just been published by the University of New Caledonia, which found cases of mesotheliomas were 30 times higher in New Caledonia than in France, and particularly, extremely high among tribal members in the northern part of that country. There are numerous reports posted online that show the mining of nickel itself, does not increase cases of mesotheliomas, a cancer brought about by inhaling asbestos fibres. It does appear, however, that northern New Caledonia contains many deposits of asbestos rock. When this rock is cleared, the air is filled with asbestos fibers, which have been found to be harmful to humans. Will the construction of the Koniambo mine, with its infrastructure requirements, cause these deposits to be disturbed? We don't know, but if they are, you can bet we will hear more about it.