03 September 2003 14:20
Nickel price outlook remains high despite end to Inco strike
MELBOURNE, Sept 3 AAP - Nickel prices are expected to continue to rise until at least 2005 as a surge in demand is
accompanied by a lull in greenfields projects, JB Were commodities analysts said today. JB Were said the end to the
three-month strike at Inco Ltd, the western world's largest nickel producer, in Ontario, Canada, had not weakened
the outlook for the metal, which is used mainly in stainless steel production. "In spite of the ending of the three
months labour dispute at Inco's Sudbury works, we remain very bullish on the outlook for the nickel price," JB
Were analysts Malcolm Southwood and Paul Gray said in the report released today. The price was driven by China's
strong and growing demand for stainless steel, the prospects of recovery in western demand for stainless steel and
expectations of relatively weak growth in nickel supply. Nickel inventories were already low, JB Were said, adding that
its nickel forecast prices were now under review. "We envisage annual global deficits in 2003, 2004 and 2005,"
the broking house said. The report said a surge in demand from China had occurred at a time when growth in nickel supply
was expected to be relatively weak. "Indeed, we have to wait until at least 2006 before any new greenfield capacity
is likely to be commissioned in the form of Inco's Goro (New Caledonia) and Inco's Voisey Bay (Canada)
projects," the report said. The break in nickel production stems from a spate of nickel projects in the late 1990s
which sparked a fear that long term oversupply would lead to lower prices. The projects did not deliver as expected and
London Metal Exchange stocks are now as low as 17,000 tonnes, partly because of the Inco strike, while Russian
inventories of 65,000 were already being released to the market, JB Were said. "We calculate that reported
inventories amount to around eight weeks," the report said. Stainless steel scrap availability was also weak adding
to the pressure on nickel prices. JB Were said it believed poor nickel availability would stall global stainless steel
production from late 2004. JB Were said its current pricing suggested the average annual nickel price would come in at
$US3.85 in 2003, rising to $US4.33 in 2004 and $US4.50 in 2005. However it said the prices were under review and there
was a significant upside risk to these forecasts. AAP
[AIW [Asia Africa Intelligence Wire]] |
RUSSIA IN FACTS
