Fortescue Metals Tycoon Has Eye On Nickel; Steel Billet Cash Price Improves

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Fortescue Metals Group Ltd.’s Andrew Forrest is known for taking an “unloved commodity (iron ore), land shunned by global mining companies, a large dollop of debt, and an optimistic view of Chinese demand” and turning a large profit (The Wall Street Journal).

He now how his eye on nickel.

“‘The technical capability of the metal is profound,’ said Mr. Forrest in an interview. ‘The number of things it can do from turning iron to stainless steel, to its capability of almost being able to heal itself, to its ability to store energy, makes it an exceptional metal.'”

“Mr. Forrest took a similar view on iron ore at a time when many investors showed little interest. When he founded Fortescue in 2003, the price of the steelmaking material was just US$27 a ton. It now trades around $132 a ton, and peaked above $190 in early 2011.”

“Still, many analysts disagree with his outlook for nickel. Along with aluminum, nickel has the worst prospects of any metal as output from new mines swamps the market, according to Deutsche Bank analyst Michael Lewis. Consultancy Wood Mackenzie Ltd. has previously estimated some 40% of global nickel output is unprofitable around current prices.”

Strengthening prices ended a three-day flat streak as the cash price of steel billet moved up by 2.3 percent on Thursday, October 31 on the LME to $220.00 per metric ton. The 3-month price of steel billet saw little movement on the LME at $230.00 per metric ton.

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Chinese steel prices were flat for the day. The price of iron ore 58% fines from India was range bound. The price of Chinese HRC held steady. For the fifth consecutive day, the price of Chinese coking coal held flat.

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The 3-month price of the US HRC futures contract saw little movement yesterday at $655.00 per short ton. The spot price of the US HRC futures contract continues hovering around $651.00 per short ton for the fifth day in a row.