Nickel Back Up, Norilsk Says Supplies Will Go Into Deficit Next Year

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Nickel jumped 3.2% Monday on the London Metal Exchange as OAO GMK Norilsk Nickel of Russia, the world’s largest producer of the refined metal, said the global market will swing to a deficit next year.

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Bloomberg News reported that Norilsk said yesterday the global nickel surplus will drop to a four-year low in 2014. Demand will exceed output through 2019 as consumers seek to replace supplies from Indonesia, the world’s largest producer from mines, after the government barred exports of raw ore in January, Macquarie Group Ltd. said last week. On May 13, the price surged to a 27-month high and tumbled 11 percent in the following two sessions, according to Bloomberg.

Last week’s “pullback in prices presents a solid buying opportunity,” Goldman Sachs Group Inc. analysts including Max Layton said in a report. “Our overarching view on nickel is that prices will first need to rise in order to incentivize a substantial build out of smelter capacity in Indonesia.”

On Monday, May 19, the day’s biggest mover was the 3-month price of nickel, which saw a 3.2 percent increase on the LME to $19,195 per metric ton. This increase comes after the price fell for the two previous days. After falling for two days, the nickel spot price rose 2.2 percent on the LME to $19,150 per metric ton. The Indian nickel cash price rose 2.0 percent to INR 1,140 ($19.47) per kilogram after a two-day drop.

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Chinese stainless steel prices were mixed for the day. The price of Chinese ferro-chrome was unchanged at CNY 8,300 ($1,332) per metric ton. The price of Chinese ferro-moly held steady at CNY 145,000 ($23,277) per metric ton.

Following a 2.5 percent rise on Monday, the price of Chinese primary nickel closed at CNY 136,700 ($21,944) per metric ton. For the fifth consecutive day, the Allegheny Ludlum 316 stainless surcharge held flat at $1.16 per pound. The price of Chinese 316 stainless coil saw little movement at CNY 26,000 ($4,174) per metric ton. For the fifth day in a row, the price of Chinese 304 stainless coil remained essentially flat at CNY 16,400 ($2,633) per metric ton. The price of Chinese 316 stainless steel scrap saw essentially no change for the fifth day in a row, remaining around CNY 16,100 ($2,585) per metric ton.

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