Too Little Time, Too Much Nickel for 2009 Forecasts

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Supply & Demand

Earlier this month, Lisa borrowed a quote from Yogi Berra to warn that nickel “ain’t worth a dime” anymore.  According to new studies, the nickel market can’t expect much improvement during 2009. The International Nickel Study Group recently forecasted a nickel surplus to ring in the next year, and the surplus will last longer than any New Years’ hangover. As nickel production increases, demand seems to decrease. LME nickel stocks have reached some of their highest levels since 1999, which suggest a large surplus. An even larger surplus should soon shatter those 10-year highs; we should expect to see a nickel surplus of 110,000 metric tons.

The nickel industry faces a downhill battle. “At current prices some 50 percent of the nickel industry is losing money – it is not a sustainable situation,” Richard Knights, an analyst at Numis Securities, told Reuters. “It is all about timing and how quickly operations shut down.”

Once operations shut, it’s possible, within time, that nickel demand could reach the same highs as nickel supply. In the immediate future, though, don’t count on it: “World primary nickel production is expected to recover to 1.55 million metric tons next year, with new facilities starting up in Brazil, South Korea and New Caledonia. But, demand for the metal, used mainly in alloying stainless steel, will rise to 1.44 million metric tons next year from an estimated 1.38 million metric tons this year and 1.31 million in 2007,” shares.

If more nickel-containing products come to market, predictions could sway. Nickel-containing products play a leading role in forecasts. INSG says that demand from China also plays a role in forecasting the market.

–Amy Edwards

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