Scotiabank: Zinc and Nickel ‘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 the Scotiabank.

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Prices for zinc and nickel have been steadily rising this year as global growth continues to rebound, fueling 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.”

Prices for zinc are already up more than 17% so far this year and have jumped to US$1.07 from US$0.96 per pound in the past month alone. Nickel prices have risen to a recent price of US$8.64 from US$6.31 per pound at the end of 2013.

On Monday, September 15, the day’s biggest mover was the nickel 3-month price, which saw a 0.8 percent decline on the LME to $18,400 per metric ton. The spot price of nickel saw a 0.6 percent decline on the LME to $18,340 per metric ton. The cash price of primary Indian nickel declined 0.2 percent to INR 1,136 ($18.68) per kilogram.

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Chinese stainless steel prices closed flat for the day. The price of Chinese ferro-chrome held steady at CNY 8,300 ($1,353) per metric ton. For the fifth consecutive day, the price of Chinese ferro-moly held flat at CNY 145,000 ($23,640) per metric ton.

The Allegheny Ludlum 316 stainless surcharge continues hovering around $1.26 per pound for the fifth day in a row. The price of Chinese 316 stainless coil held steady at CNY 26,000 ($4,239) per metric ton. The price of Chinese 304 stainless coil saw essentially no change for the fifth day in a row, remaining around CNY 16,400 ($2,674) per metric ton. For the fifth day in a row, the price of Chinese 316 stainless steel scrap remained essentially flat at CNY 16,100 ($2,625) per metric ton. The price of Chinese 304 stainless steel scrap remained essentially flat at CNY 16,400 ($2,674) per metric ton.

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