Nickel has more than doubled in the past year because of rising demand by Chinese stainless-steel and delays to projects announced by miners including BHP Billiton Ltd. Chinas output of the alloy used in kitchen sinks may rise 37 % this year to 7.35 million metric tonne, metals research firm Heinz H Pariser said March 21. It is unlikely supply will be able to match demand before 2008, Skinner said in Mumbai. People will remain bullish in the short and medium term.
A four-month strike by Eramet SA workers in New Caledonia reduced the companys output by 50 metric tonne a day, 27% of its 185-tonne daily rate, since September 25. The strike ended in January. BHP said on November 30 that its Ravensthorpe nickel project in Australia will be delayed by as much as a year as costs rose.
Not everyone agrees. Nickel prices may fall in the second half of this year as China may substitute the metal for cheaper ingredients because of a surge in prices, Goldman Sachs JBWere Pty said. We are increasingly concerned that brisk growth in low-grade ferronickel production in China has the potential to return the global nickel market to surplus from 2008, Goldman analyst Ian Preston said in a report dated Thursday. Bloomberg
The metal will average $16.82 a pound ($37,081 a tonne) this year, according to Goldman. Its forecast implies a very sharp price correction over the next few months, suggesting a second-half average price of $14.25 a pound.