03 September 2003 16:19
Nickel prices to ease temporarily after end of Inco dispute
MELBOURNE, Sept 3 AAP - Nickel prices were expected to ease in the short term following a resolution this week to the
strike at Inco Ltd, the one world's largest nickel producer. Commodities analysts said prices were expected to
surge again going into 2004 with average annual prices edging above $US4.50 a pound in 2005 as increasing demand was
accompanied by a lull in greenfields projects. The spot price of nickel on the London Metal Exchange hit three year
highs overnight at $US4.49 a pound. AME Minerals Economics head of research John Barkas today said the end of the
three-month labour dispute at Inco in Ontario, Canada, was expected to ease these highs over the next few weeks as
tightness in the market evened out. However, he said a forecast nickel deficit in 2004, with demand exceeding supply,
should see a renewed rally in prices. A JB Were report released today said the brokerage remained bullish on the base
metal, used primarily in the production of stainless steel. JB Were analysts Malcolm Southwood and Paul Gray said the
nickel price was being driven by China's strong and growing 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. "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 tonnes
were already being released to the market, JB Were said. The brokerage said inventories amounted to about weeks supply,
and stainless steel scrap availability was also weakening, a situation likely to stall global stainless steel production
from late 2004. JB Were's current pricing sees average annual nickel price come in at $US3.85 in 2003, rising to
$US4.33 in 2004 and $US4.50 in 2005. These prices were under review and there was a significant upside risk to the
forecasts, the brokerage said. AAP jmw/pt
[AIW [Asia Africa Intelligence Wire]] |
RUSSIA IN FACTS
