"The 800-pound gorilla in the nickel market, though, is not solely China’s dominance as the largest consumer…
It is China’s domestic nickel pig iron production and that industry’s reliance on Indonesia as almost the sole supply source.........
For example, power supply is limited and unreliable, and the supply base is fragmented with few miners able to raise the finance for major investments, even if financiers were willing to lend to an industry so clearly already in oversupply. The probability is for further slippage in the export ban and special exemptions to be made, but – and here is the Big ‘But’ – a full-scale implementation would have a seismic effect on the nickel market, choking off ore supplies to China’s NPI industry and forcing widespread imports of refined metal.
If that were to happen, the nickel price could double in months, maybe even weeks. Nickel consumers are therefore closely watching developments in Indonesia – it is the one unpredictable dynamic that could shatter expectations of an orderly surplus market."
MBN Price at posting:
6.7¢ Sentiment: Hold Disclosure: Held
