Scotiabank: Zinc and Nickel Could Move ‘Dramatically Higher in 2015.’

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Zinc and nickel prices could move dramatically higher over the next two years as a cyclical recovery takes hold in the base metal sector, says a new report from Scotiabank.

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Prices for zinc and nickel have been steadily rising this year as global growth continues to rebound, fuelling stronger prices for base metals. Patricia Mohr, commodity market specialist at Scotiabank, said zinc and nickel are in a good position because they are either in or nearing supply deficit positions.

“Global supply and demand conditions for ‘refined’ zinc are in ‘deficit’ in 2014 (that is, world consumption of slab zinc exceeds production),” she said. “[For nickel], the world supply and demand balance will shift into a marked ‘deficit’ in 2015, as China depletes its inventory of Indonesian ore production.”

Dropping 0.9 percent on the LME, the nickel spot price was the biggest mover on Thursday, August 28, closing at $18,630 per metric ton. The 3-month price of nickel saw a 0.8 percent decline on the LME to $18,720 per metric ton. The cash price of primary Indian nickel closed at INR 1,146 ($18.99) per kilogram. Following a couple days of improvement, the metal’s price weakened by 0.2 percent.

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Chinese stainless steel prices were flat for the day. For the fifth day in a row, the price of Chinese ferro-chrome remained essentially flat at CNY 8,300 ($1,347) per metric ton. The price of Chinese ferro-moly saw little movement at CNY 145,000 ($23,532) per metric ton.

The Allegheny Ludlum 316 stainless surcharge held steady around $1.26 per pound. The price of Chinese 316 stainless coil remained essentially flat at CNY 26,000 ($4,219) per metric ton. The price of Chinese 304 stainless coil continues hovering around CNY 16,400 ($2,662) per metric ton for the fifth day in a row. For the fifth consecutive day, the price of Chinese 316 stainless steel scrap held flat at CNY 16,100 ($2,613) per metric ton. The price of Chinese 304 stainless steel scrap held steady at CNY 16,400 ($2,662) per metric ton.

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