Nickel likely to surpass $55,000 a tonne this year

Apr 27 | Updated: Apr 28 2007, 08:05am hrs
Nickel prices may surpass this years record as supplies of the metal used to make steel resistant to corrosion lags behind demand, Standard Bank said. Nickel may rise above $55,000 a metric tonne, exceeding the April 24 peak of $50,200 a tonne, Michael Skinner, an analyst at Standard Bank in London, said in an interview on Thursday.

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.