Nickel futures prices across all national commodity bourses may continue to rule weak over the next few days chiefly on slow down in demand and lower production supported by higher inventories at London Metal Exchange (LME).
MCX nickel October futures fell by about 23% to reach below the Rs 600-a kg mark in just 10 days of October as prices for the stainless steel raw material dropped 23% last week, while LME nickel (cash) prices also dropped to $11,950 a tonne, down by nearly 25%, as slow down in demand coupled with higher stockpiles weighed down on the metal prices.
The global nickel market will be in surplus of 1.10 lakh tonne in 2009 with a sharp pick-up in output outweighing a slower recovery in usage, a International Nickel Study Group (INSG) report stated. ?Inventories are still at their eight-year high levels of above 54,936 tonne which indicates the reduced usage of the metal. The output may outpace demand by 1.10 lakh tonne next year, up from a surplus of 30,000 tonne this year,? an analyst with Karvy Comtrade said. World primary nickel usage in 2008 started well, but as the world economic upheaval continued which included a tightening of credit facilities, also resulted in lower nickel price. Demand and production of stainless steel also dropped from the middle of the year in most parts of the world, including China.
World primary nickel usage (consumption) was 1.31 million tonne in 2007, and is estimated to increase to 1.38 million tonne in 2008. For 2009, a slow recovery of nickel usage is anticipated with the main increases taking place in Asia and is forecast at 1.44 million tonne, according to the INSG.