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Nickel prepares for recovery
November 20, 2009 - 00:00 GMT
Following big production cuts and aggressive destocking when the recession hit late last year, analysts are now optimistic that there will be a fairly firm recovery for the nickel market as miners re-start production, new mines are opened and users begin to restock, reports Samantha Hodge.
By late October last year, the average LME cash price for nickel had fallen to $8,800/tonne – a huge plunge from its peak around $33,300/t just seven months earlier. This painfully low price was below some smelters’ cost of production, so many nickel producers had to cut output to avoid losses.
Nevertheless, the International Nickel Study Group (INSG) in Portugal noted that stocks of the metal have grown as the worldwide economic recession continued. At the beginning of 2009 LME stocks stood at around 78,000 tonnes, but by the middle of the year they were above 100,000 tonnes.
According to INSG data, primary nickel production fell to 1.38m tonnes in 2008 from 1.42m tonnes in the previous year. Analysts now expect nickel production to fall to about 1.28m tonnes in 2009, before increasing to about 1.44m tonnes in 2010. Despite the worldwide decline, China, Norway and the European Union managed...
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