Recent slight adjustments to the nickel price has caused massive...

Recent slight adjustments to the nickel price has caused massive overselling of nickel stocks way out of proportion to the minor drop in nickel price. Why?
The campaign of fear encouraged by many ss manufacturers has been successful.

What have they been saying?

1) SS producers have been cutting back because of reducing demand. This is nonsense. Some SS manufacturers have had to cut back because they have difficulties raising the finance to fund their usual production.

2) Limonite nickel/ Nickel Pig Iron is taking over. More Nonsense. Nickel Pig iron is the saviour of the traditional nickel industry. Ill explain why.

Demand is so high for nickel that Nickel Pig Iron has been accepted into the Chinese SS market without adverse effects on the nickel price. In fact substantial amounts will be produced this year (85000 tonnes is the estimate). This may rise to 113000 tonnes in 2008.

What would be the situation if this nickel pig iron didn’t exist? Rationing of nickel. And that means FORCED substitution.

At the moment you go to the hardware store to buy a sink. You are shown 5 different brands of SS sink. They cost $400 now instead of $200 a year ago because there is $50 more nickel in the sink- choose one or go without.

But if nickel was rationed sink manufacturers cannot sell you a SS sink. Cant get enough SS. They will actively promote the new steel sink covered with the latest Dupont ceramic finish- its in a range of designer colours and your dishwasher front can be matching. Next thing designer sinks are all the rage, no-one wants a ss sink any more, and Dupont has incentive to improve its ceramic finish so it doesn’t chip.

Ok what happens when all these new Laterite nickel plants come on stream- wont there be too much nickel (especially when 113000+ tonnes comes from nickel pig iron?) Not the least bit likely. The export of limonite clay from the Philippines, New Caledonia and Indonesia is presently tolerated and encouraged by the traditional nickel industry for the reasons outlined above. But when there is sufficient tradional nickel available to replace the pig nickel, exports will stop- not because of price, as some analysts have suggested, but from pressure from the local business communities in the countries above.

Export of clay means digging it up and transporting it out of the country. Traditional (laterite) processing means big plants, high energy consumption, high maintenance. Huge dollars to local business in say the Philippines as compared to direct clay export.

The local businesses know they cannot sustain both industries- the laterite plant owners are global companies now- the first plant to reduce production will be in the Philippines if limonite clay exports continue. And the new proposed laterite plant may be shelved.

Total self regulation. We have nothing to fear from nickel pig iron at all!
In fact it’s the best thing since sliced bread. But the SS manufactures will continue their fear campaign.