A Nickel Ain't Worth A Dime Anymore

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That quote by Yogi Berra summarizes the state of the nickel market. Though nickel rallied as of close of business yesterday to $12,850 ton, that price is only a fraction of what the metal sold for in May of 2007 (over $50,000/ton). According to a recent press release from the International Nickel Study Group, world consumption of nickel started okay during the first half of 2008 but because of the economic upheaval, challenging credit markets and fall in nickel prices, both demand and supply have come down.

But unlike the production cuts announced by European steel producers and aluminum producers both in China and the US, the nickel industry is ramping up production with lots of new capacity coming on stream. BHP Billiton plans to add 50,000 tons of capacity in Queensland. Brazilian Vale, owner of the large Goro project in New Caledonia expects 50,000 tons of new capacity to come on stream by the end of this year. Several new projects are also scheduled to begin in 2009 in South Korea and Brazil,  according to Reuters.

It’s clear that nickel producers will need to curb production to shore up the price of nickel. And again, this poses a buying opportunity for stainless and nickel consumers. The gettin might not be this good a year from now.

–Lisa Reisman

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