Citi Group sees nickel deficit at deficit 62,400 mt in 2014

The Senior Advisor of the Ministry of Economic Affairs of Indonesia, the largest nickel producing country in the world, Bambang Adi Winarso, confirmed that the ban  will continue to  remain if the  nickel metal has been considerably hiked after the ban. The Chief Market Strategist of Long Leaf Trading Group, which is located in Chicago, Tim Evans, stated that, the strength of US data, as well as the ban on nickel export by the Indonesian government will hike the price of nickel further, demand for the metal is also noted to be rising.

According to the forecast of Citi Group, which was broadcasted yesterday, the deficit of nickel this year would be 62,400 tonnes, at the same time the deficit in the year next would be much more at103,000 tonnes. The bank further asserted that, the nickel inventories in China, all are dried up, with the supply from the Philippines has also declined. The optimism on the price of nickel is still high.

 

Nickel and its boom

In  the month of May, this year, nickel was supercharged, at the London Metal Exchange, climbing its highest peak, at 50 percent at 21,625 dollars per tonne. At the same time in the case of stainless steel, the price hit the ground  to 14,690 dollars  per tonne.

The sudden submission of nickel in the market has reflected the complete, hyped bull narrative of the market. The unexpected decision taken by the Indonesian government to ban the export of unprocessed minerals as well as lower grade nickel, triggered the forecasts on the surge.

One part of the forecast still states to be intact, which is, the Indonesian government’s ban on the nickel exports, even after such a long period of time, the country shows no signs of moving from its former decision, but still nothing changed, as predicted by the analyst.

It hasn’t; as expected, led to the halt of Chinese Nickel Pig Iron manufacturing as expected in the forecasts made by the analysts. Neither was there any kind of shortage or decline in the supply of iron ore in the market.

The stock houses at the London Metal exchange was filled with nickel produce and hit almost all the record, as the nickel produced in  China, flowed to LME warehouses. The story of nickel supply deficit, and closure of  nickel pig iron production of Chinese producers, even though expectations lingered on the surface.

Nickel continues its impressive fall

By the end of the week on Friday, the nickel price hits seven month low to 14,980 dollars per tonne, and at the same time the stocks on the London Metal exchange topped the roof with 378,132 tonnes.

At the beginning of the year, the metal, was expected to be the rising metal among other base metals in the year 2014, but the hopes have all been shattered and the supply has risen about 9 percent ahead of the coming year.

The commodity analysts at, Common wealth Bank, Vivek Dhar and Lanchlan Shaw, stated that, there is a high chance of nickel surplus in the year 2015-2016.

In the beginning of this year, Indonesia, the main producer as well as the exporter of high grade nickel ore, and one of the  vital exporter of nickel to the steel industry of China, banned the exports of unprocessed nickel to the world.at that time, China advanced its procedure by importing nickel from Philippines, the under developed mines Indonesia, and also imported ferro-nickel from other parts of the world to cover up the deficiency caused by the decline in the nickel imports from Indonesia. Many stainless steel producers in China, had to change the amount of nickel in their final product.

Brazil’s Vale close to becoming world’s largest nickel producer

Brazil’s Vale (NYSE:VALE) is growing its nickel output at a pace that not even its own executives were able to predict, with the Rio de Janeiro-based iron ore giant posting Thursday a 16% production increase of the stainless steel ingredient.

Nickel production totalled 72,100 tonnes in the September quarter, which is the best third-quarter performance since 2008, Vale said.

The figure takes the miner’s total output of the metal this year to 201,400 metric tons and its next production target of 289,000 tons in 2014, higher than predicted by Norilsk Nickel, the world's largest producer of the metal

The figure takes the miner’s total output of the metal this year to 201,400 metric tons and its next production target of 289,000 tons in 2014, higher than predicted by Norilsk Nickel, the world's largest producer of the metal, which plans to produce 230,000 tons this year volume.

The historic output was reached despite planned maintenance at the company’s Thompson mine in Canada, Vale added.

Nickel production at the firm’s Canadian mines increased 18.7% year-on-year in the third quarter of 2014, reaching 41,700 tonnes, on higher volumes at its Sudbury and Thompson operations.

Analysts watch Vale's base metals division, of which nickel is the largest component, to see if it can help offset falling revenue from iron ore.

Deutsche Bank experts expect nickel to peak at $27,000 a metric ton in 2017. However, nickel for delivery in the last three months fell 0.4% to $15,145 a ton in London Thursday, the lowest since March 3.

Vale is expected to release its third-quarter financial results later this month.

World Nickel output and utilization to increase in 2015, says INSG

The participants at the meeting held last week by the International Nickel Study Group (INSG) in Lisbon, Portugal has predicted significant growth in global Nickel production and consumption during 2015.

According to INSG, the improved economic situation around the globe has led to increased consumption of Nickel during first half of the current year. The countries which reported significant consumption growth during the six-month period were China and North America. The conditions remained favorable for Nickel market in the European region and Japan.

The Indonesian ban on ore exports has affected Chinese nickel pig iron production. The shortage of availability of nickel ore has adversely affected the functioning of large number of new facilities that became on stream during this period, thus resulting in reduced global production of Nickel. However, nickel ore exports from the Philippines continued to increase.

INSG predicts marginal drop in world primary nickel production in 2014. The production is likely to to reach 1.93 Mt in 2014. It must be noted that the production during 2012 and 2013 were 1.75 Mt and 1.94 Mt respectively. However, the output is likely to record marginal growth in 2015 to total at 1.95 Mt. INSG cautions that the above forecasts are subject to alterations on account of future market developments.

The world primary nickel usage is estimated to increase from 1.78 Mt in 2013 to 1.92 Mt in 2014. The usage is likely to post further growth to reach 1.97 Mt in 2015, added INSG.

Natixis sees LME Nickel to avg $19,000 a ton in 2015

LME nickel prices are expected to average $19,000 a ton during next year, said Natixis in its Metals review.

According to Natixis, of all the base metals, there is perhaps the greatest potential uncertainty surrounding the outlook for nickel.

Uncertainty surrounds:--The strength of Chinese demand for nickel,
--The size of unreported nickel (and stainless steel) inventories held in China,
--The likely volume of NPI produced in 2015H1 as a ban on exports of Indonesian ore combines with seasonal weakness in Philippine supplies,
--The pace at which Indonesian nickel ore is likely to return to the global market in the form of 4% NPI.

Natixis's central forecast anticipates a period of deficit during first half of 2015, resulting in an average LME nickel price of around $19,000 a ton over 2015 as a whole, although there is scope for substantial variation around this mean.

By 2016, The firm would expect the market to have settled more closely upon its longer-term equilibrium, hence Natixis forecast for an average price of $17,375/tonne for that year.

Norilsk sinks as nickel demand slumps

The American cache receipts of the world’s largest nickel producers stepped down to 1.6 percent, on Wednesday to 17.23 dollars, due to the decline in the price of nickel, which is the most important metal in the process of treating steel for its production. 20 percent of the stock of the company has been lost, since the month of July, first time after lowest in five months, which made the decline stand apart as one of the benchmarks of Micex Index when it tumbled down followed by the annexation by the President Valdimer, regarding Crimea in  the month of March.

Last month, during the slowdown in the Chinese economy, nickel was forced to0 enter a bear market. As China is the biggest consumer of nickel, the stockpiles raised to a record. On October 7th, the International Monetary Fund, had to cut off their forecast, as the decline in demand is expected to grow further. After being inspired by Russia’s role in the war of Ukraine, Norilsk encouraged the sell-off in the Russian equities, which is promoting 46 percent, which is almost near to a three year high after months of shortage in the nickel supply.

Nickel prices to average around $20,000 per mt in 2015

According to Carey Smith, Research Analyst, Alto Capital, LME Nickel prices are most likely to average around $20,000 per mt in 2015. The high prices are on account of the Indonesian ban on nickel ore exports and the anticipated supply shortage during early-2015. The Nickel prices are likely to trade between $17,000 per mt and $23,000 per mt during 2015. The research report also states that the prices of the metal are expected to average at $18,000 per mt during 2014.

China relies heavily on Indonesian ore exports to produce nickel pig iron. The country had approximately 30 million mt of ore stockpiles, which is soon getting depleted. The stocks are likely to hit the bottom levels by early-2015, notes Smith. As of now China buys low-grade ore from Philippines. The supply from Philippines is expected to continue further. However, China has already started construction of nickel pig iron smelters in Indonesia, the earliest of which is expected to become online towards end-2015.

The research report forecasts that Chinese ore demand may continue to grow, even as nickel pig iron production dropped during 2014. Supply tightness will keep the nickel pig iron production by the country under pressure. The country will have to reach out to new supply sources or draw out from LME stockpiles.

Nickel prices have appreciated by nearly 40% since the start of the year, when Indonesia imposed ban on ore exports. The LME nickel prices have been rangebound between $18,000 per mt and $20,000 per mt. The current prices are down by almost 18% when compared with the 2014 peak of $21,500 per mt reached in May this year.

China to Import 45 Million wmt of Nickel Ore from the Philippines in 2014

 Inbound shipments of nickel ore to China from the Philippines are expected to reach 45 million wet tonnes (wmt) in 2014, Shanghai Metals Market foresees.    The Philippines has become the leading supplier of laterite nickel ore to China after Indonesia introduced its export ban on unprocessed ore early this year.    Higher profit following strong price gains of nickel ore has encouraged a large number of mines in the Philippines to increase production or restart idled operations.

The Philippine ban on nickel spooks out LME

 Since the ban on export in Indonesia, the Philippines have been playing its role regarding the fulfillment of nickel demand in China. The spread of latest news has created a tremendous wave in the nickel market. But relief was bought when the announcement came that the Philippine ban  on exports are many years away from now.

At London Metal Exchange, the benchmark price of nickel declined 1000 dollars to 18,925 dollars on Tuesday; a three month collapses, wiping clean all the profits gained by nickel in the previous days. The market is likely to be overly smug, by the recent lagging in the timeline before even the happening of the unsure Phillipines ore ban, if the whole market is expecting the events in the country to be same as that in Indonesia.

Most probably this is what recent steep offset in the nickel market is all about. Or maybe this can be the reaction of the market towards all the bullish rumors.

Since the market changing ban of Indonesia over unprocessed nickel, the market life of nickel has been going upside down and has been outrun by all other base metals in the market. By issuing the ban Indonesia has cut down about one third of global nickel supply. China and many other countries were in trouble as almost all the producers in the countries provided nickel for stainless steel plants, and their main source of raw material was Indonesia.

Nickel Prices Forecasted to Keep Rising

As debate rages in the Philippines about the banning of ore exports, nickel prices have been yo-yoing, with concern fluctuating between panic over stocks and assurances that there is enough of the metal to go around.

Nickel surged back in mid-May from roughly US$8.20 per pound to highs of near $9.50. Since then it has fluctuated, never reaching its initial high; most recently it skyrocketed in August and early September on the back of nickel supply crunch fears.

The metal’s performance is a sharp difference from 2013, when suppliers were struggling with a nickel surplus that left them short on cash.

Looking for help

After Indonesia left the ore export market — the government placed a ban on ore exports in January 2014 — it left large consumers, such as China and Japan, scrambling to identify other sources.

Indonesia’s elimination from the market not only pushed prices sharply upward, but heightened interest in identifying additional supplies.

For its part, China shifted its focus to the Philippines. At the time, Indonesia accounted for 20 percent of global nickel supplies.

According to the World Bureau of Metal Statistics, in December 2013, China imported only half a million tonnes of nickel from Philippines, with 3 million coming from Indonesia.

China, the world’s largest nickel consumer, relies on the ore for use in its steel mills.

A report published in August by Patricia Mohr, Scotiabank’s vice president of economics and commodity market specialist, forecasted nickel prices to keep climbing.

“The world supply & demand balance will shift into a marked ‘deficit’ in 2015, as China depletes its inventory of Indonesian ore for ‘Nickel Pig Iron’ production (used in stainless steel),” she wrote.

Stockpiles growing

Countries are now building stockpiles should the Philippines go through on its threat to ban the export of ore deposits.

Reuters has already reported that China began stockpiling high-grade nickel laterite, known as nickel pig iron , back in May when murmurs of a ban in the Philippines started appearing.

Bloomberg reported that warehouses in Johor, Malaysia, have 157,200 tons of refined nickel, or 49 percent of the LME total, and are 38 percent higher for this year. Total LME nickel stockpiles represent about 1.5 months of solid consumption.

According to the Financial Times, nickel stocks in London Metal Exchange-registered warehouses hit a record of nearly 318,000 tonnes in August, up from 262,000 tonnes at the start of the year and 12 percent since June.

What’s next?

In a report, National Australia Bank said to expect nickel prices to remain steady until stockpile numbers start to dwindle with the ban.

As the single biggest importer of nickel, China seems to remain concerned about any potential ban — judging by its stockpiling of ore.

When Indonesia first placed a ban on exporting ore in an attempt to boost investment in its domestic smelters, nickel prices surged about 35 percent, causing concern over future stockpiles.

However, such rampant concern has been tempered in the past few days, with lawmakers in the Philippines admitting that a potential ban is months away, if not further.

Nickel slides as Philippine supply concern fades

* SocGen advises short Dec. 15 copper on growing supply

* Shanghai zinc tumbles 3 pct as speculators slash long positions

 

- Nickel shed over 5 percent on Tuesday after worries faded about a squeeze on supply from the Philippines, and other metals were knocked by a robust dollar that hit a 14-month high.

 

Three month nickel on the London Metal Exchange ended at $18,925 a tonne, down 5.04 percent and making for the biggest one day price fall since May 15.

 

The metal hit its highest since July 3 at $19,940 on Monday, after a Philippine Congressional committee approved a bill seeking a halt to exports of unprocessed mineral ores.

But the proponent of the bill said in an interview with Reuters on Tuesday that a proposed ban may not be implemented for about seven years

 

The market was jolted in January when top exporter Indonesia implemented a ban on unprocessed ore shipments, sending nickel prices soaring. Nickel is up about 40 percent so far this year.

 

The Philippines is now the top supplier of nickel ore for China's stainless steel industry following the Indonesian ban.

 

"Five or seven years is a very long time. Anything can happen in that time and I would have thought that we will see nickel ease off further," said Stephen Briggs, metals strategist at BNP Paribas in London.

 

 

METALS BROADLY DOWN

 

Selling swept through the LME metals complex, prompted by a strong dollar <.DXY> that hit 14-month highs against a basket of major currencies. A firm dollar makes commodities priced in the U.S. currency more expensive to buyers outside the United States. [USD/]

 

Zinc and nickel were the biggest decliners as investors sold off long positions on the view that prices had got ahead of supply-demand fundamentals.

 

Investors in both metals have been betting that future shortages would boost prices, but supplies are still adequate.

 

"Zinc has moved up a ... long way, and it too has rallied ahead of the fundamentals. It certainly has moved beyond $2,300 rather sooner than I expected," Briggs said.

 

LME zinc ended down 3.6 percent at $2,304 a tonne, and the most-traded November zinc contract on the Shanghai Futures Exchange fell 3 percent before closing slightly off its lows at 16,720 yuan ($2,726).

 

"Open interest has tumbled today, so I believe it's to do with unwinding of previously speculative long positions," said a source at a trade house in Shanghai.

 

LME copper closed at $6,840 a tonne, down 2.15 percent, having hit its lowest since late June at $6,821.75.

 

Societe Generale initiated a short copper position in a note on Monday, citing prospects of rising supply.

 

"We recommend shorting the Dec-15 LME copper contract at current levels above $6,900 per tonne, with a target at $6,500 per tonne or lower," said analyst Mark Keenan of Societe Generale in Singapore.

 

The Shanghai Futures Exchange reopened after a long holiday weekend but Hong Kong was closed on Tuesday.

 

In other metals, aluminium lost 1.38 percent to $2,068 a tonne. Lead fell 3.27 percent to $2,127 a tonne, having hit its lowest since mid-June earlier at $2,124 a tonne, while tin shed 2.11 percent to $20,900 tonne

Nickel price rally still has a long way to go

Indonesia, supplying more than a fifth of global exports, surprised the mining world in January by putting into effect an outright ban on nickel ore exports.

Initially record warehouse inventories, massive stockpiling by Chinese pig iron producers and growing mine supply kept a lid on the price which was languishing at near five-year lows below $14,000 a tonne at the start of the year.

But the Asian nation, against expectations, stuck to its guns and the ban, in combination with fears that tensions with Russia could affect supply from top miner Norilsk, sent the price of the steelmaking ingredient above $20,000 in May.

The price subsequently pulled back from those levels, but last week saw nickel take another stab at $20,000 a tonne after the Philippines – the only other source in the region of high-grade laterite ore required by China and responsible for 9% of global mine supply – hinted that it may follow Indonesia's playbook.

Even before suggestions of an ore export ban Philippine supply has been sketchy

Nickel was last trading at $18,750 and is up 35% in 2014, but expectations are for the price to appreciate sharply this year and next.

Capital Economics, a research house, says Chinese pig iron makers are likely to have run down their stocks by the first half of next year.

Even before suggestions of an ore export ban Philippine supply has been sketchy. Already Japanese refiners and steelmakers are struggling to buy ore and once China re-enters the market regional supply will be highly constrained.

Capital Economics argues that the rise in LME stocks of refined nickel at more than 330,000 tonnes is less an indication that supply is ample, but that metal from China and Australia, previously held off market are being moved into visible locations.

Another factor that should keep prices on the ball is the slow progress with the construction of smelters (some 16 have been proposed) in Indonesia, ostensibly the reason for the ban in the first place.

Capital Economics forecasts nickel to reach $21,000 next year, but others are much more bullish.Citibank sees $24,000 next year and a peak of $30,000 while Scotiabank predicts $23,700 in 2015 and highs of $26,500 the year after that.

Nickel hits 7-week high as Philippine news spurs speculators

Nickel prices climbed to their highest in seven weeks on Thursday as speculators returned to the market on worries that the Philippines could follow Indonesia in banning unprocessed ore exports.

Three-month nickel on the London Metal Exchange soared to a session high of $19,498 a tonne, its strongest since July 14, driven by buying from commodity trading advisers (CTAs) and macro funds, traders said.

The metal later pared gains to end at $19,395 a tonne, up 1.7 percent. It is up nearly 40 percent so far this year.

Nickel hit a 27-month peak of $21,625 a tonne in May after top exporter Indonesia banned unprocessed ore shipments to stimulate its domestic processing industry.

Prices jumped 2.8 percent on Wednesday on the news that a Philippine senator had proposed a ban on raw materials exports. 

"We've taken away Indonesian nickel ore and if you also take away Philippines as well, you can wave goodbye to the nickel pig iron (NPI) industry in China," said Nic Brown, head of commodities research at Natixis in London. "So this is clearly a big deal. That's why the market is taking it so seriously."

After nickel's May peak, prices drifted lower and many speculators closed long positions, but the market is likely to extend gains as they re-enter the market, Brown said.

"We expected to see prices above $20,000 a tonne at some point in Q4 going into Q1 next year. But we could get there rather sooner than we expected and even $25,000 is not unreasonable if you take Philippine ore out of the equation."

COPPER GAINS

Copper rebounded from two-week lows and other metals also rose after the European Central Bank cut interest rates to new record lows to support the stagnating euro zone economy. 

More accommodative monetary policy could free up liquidity for industry and investors, supporting metals prices.

ECB President Mario Draghi said if inflation looked like staying too low for too long, the ECB Governing Council was unanimous in its commitment to using other "unconventional instruments" - a phrase taken as code for printing money as the U.S. Federal Reserve and Bank of England have. 

LME copper closed 0.4 percent higher at $6,930 a tonne after falling 1 percent in the previous session when it reached a two-week low of $6,882 a tonne.

Dimming copper's price prospects, however, were mine supply bottlenecks being cleared and beginning to feed into the market.

Newmont Mining Corp signed a deal with Indonesia that will allow for the resumption of copper concentrate exports next week, the head of the firm's local unit said, ending an eight-month tax dispute.

Aluminium closed 1.3 percent higher at $2,105 per tonne, zinc ended 1.4 percent higher at $2,398 per tonne, lead closed 0.8 percent higher at $2,225 per tonne and tin closed 0.7 percent higher at $21,500 per tonne.

Nickel surges on Philippine ban proposal, options expiry

* Philippine senator urges unprocessed ore export ban

* Nickel options expiry helps boost prices-analyst

* Tin falls to lowest level since January

Nickel prices jumped to a four-week high on Wednesday on news that a Philippine senator had urged a ban on unprocessed mineral ore exports and also following an options expiry in London.

 

Copper fell on higher exchange stocks and as investors downplayed signs of progress towards peace in eastern Ukraine while tin slid to a eight-month low on worries about oversupply.

 

Three month nickel on the London Metal Exchange raced 2.8 percent higher to close at $19,075 a tonne, the highest since Aug. 7.

 

Prices, which are up by around one-third in the year to date, were bolstered by news that a Philippine senator had filed a bill urging a halt to exports of unprocessed mineral ores. 

 

The proposed halt is similar to a ban introduced by Indonesia from January that led to a sharp spike in nickel prices and cut other ore exports.

 

Most analysts expect a deficit in nickel next year, and so the Philippines news worried investors, but some analysts were wary of the gains since.

 

"This is one senator introducing what we would call a private members bill. It's far too early to say whether it will gain traction," BNP Paribas analyst Stephen Briggs said.

 

Analyst Edward Meir at broker INTL FCStone was also sceptical. "Instituting a ban will result in foregoing massive amounts of revenue, not to mention the fact that buyers may very well have found other suppliers in the interim," he said in a note. "We would therefore not be jumping on this particular rally in nickel."

 

Many investors have been exposed to nickel through the options market, and the expiry of September options was also a factor in the surge in prices, analyst Leon Westgate at Standard Bank said.

 

"With options declaration rolling off, some of the recent gravitational pull of the $18,500 level has vanished," he said in a note.

 

Open interest in September call options was concentrated at the $18,500 strike. 

 

 

OTHER METALS SLIDE

 

In other metals, copper slid 1 percent to finish at $6,904 a tonne, its lowest level in two weeks. Prices have struggled to gain headway in recent weeks as expectations of fresh supply have dampened investor interest.

 

Daily LME data showed stocks rose by 7,000 tonnes to 154,825 tonnes, their highest since July 22 after two weeks of near straight increases. 

 

"Copper took a hit when LME stocks (data) came out. If the surplus is going to become more visible through exchange stocks, that would be meaningful. It's too early to say," Briggs said.

 

Markets were wary of news about the Ukraine conflict.

 

Russian President Vladimir Putin said a deal to end fighting in eastern Ukraine could be reached this week, but hopes of peace were clouded by Western concerns that the announcement was timed by the Kremlin to wrong-foot NATO on the eve of a summit.

 

"This news about Russia and Ukraine, the immediate impact you're more likely to see through oil andprecious metals for one, and secondly, it's not clear what it means," Briggs said.

 

Some investors hoped for further policy action at the European Central Bank meeting on Thursday after data showed euro zone retail sales slowed in July, while business activity grew at the slowest rate this year in August. 

 

Looser policy in Europe would cheapen liquidity for industry and investors, who may raise their holdings of hard assets, which tend to hold their value when paper currency depreciates.

 

Aluminium shed 1.3 percent to end at $2,079 a tonne, moving away from last week's high above $2,100, which was the most expensive since February 2013.

 

A partial closure of capacity at an aluminium smelter in China helped drive up domestic prices of the metal by as much as 4 percent this week as investors scramble to compensate for an expected shortfall in supply.

Caroline Bain, senior commodities economist at consultancy Capital Economics, said its forecasts for aluminium had recently been revised.

 

"We are anticipating a small deficit of just over 100,000 tonnes this year, but we have the market back in surplus next year as we expect China's production to keep growing," she told the Reuters Global Base Metals Forum.

 

Zinc closed 0.5 percent weaker at $2,365 a tonne, having struck a four-week top of $2,391.25 in the prior session, while lead shed 1.4 percent to $2,208.

 

Tin fell 0.8 percent to end at $21,350, the lowest level since January, as analysts and investors scratched out their previous forecasts of a deficit this year due to more supplies than expected and soft demand.

Nickel price rally to continue into 2015: Goldman Sachs

The latest research report published by Goldman Sachs-the American multinational investment banking firm predicts the price rally in Nickel to continue into 2015. The surplus in the global refined nickel market has narrowed in 2014, when compared with the previous year.

The report states that the rise in LME Nickel inventories is the result of shift in stocks from Australian stockpile and Chinese bonded warehouses. The move from Australian stockpiles was witnessed since early-2013. However, the inspections at Chinese Qingdao port have resulted in movement of stockpiles to LME warehouses since Q2 this year.

The shifting of stocks accounted for over 75% of the total rise in LME stocks. The research indicates that almost 50,000 mt out of the LME stock rise of 66,000 mt in 2014 is due to stock shifts. Since beginning of 2013, the LME stockpiles have increased by 180,000 mt. Out of which, nearly 80,000 mt is due to the shift of stocks from Australia and China.

The ban ore Nickel ore exports by Indonesian administration have led to a strong rally in Nickel prices during the year. The prices have surged nearly 35% year-to-date. The ongoing Indonesian ban may deplete the high grade ore stocks in Chinese warehouses. This will act as the major trigger for the next leg of up move in Nickel prices. The turnaround is expected to happen towards end-2014 of early Q1 2015.

The prices have currently stabilized in the range of $18,000 to $19,000 per mt. The investment banking firm predicts the Nickel prices to rise to $22,000 per mt in 2015.

Scotiabank foresees dramatic rise in Zinc and Nickel prices

As per the latest analyst report from Scotiabank, the cyclical recovery in base metal sector is likely to result in dramatic rise in zinc and nickel prices over the next two years.

The prices of both these metals has witnessed steady rise during this year, the report noted. The zinc prices have already appreciated by nearly 17% YTD. During past month alone, the prices rose by nearly 11%. Meantime, nickel prices have rallied nearly 37% so far this year. The prices have moved to $8.64 per pound from $6.31 per pound at the start of the year.

The Scotiabank report states that both zinc and nickel are positioned well for a drastic rise, as they are already in or near to supply deficit situation. The world demand and supply balance for refined zinc will turn into deficit in 2014. World Nickel market is also most likely to shift into deficit in 2015.

Zinc prices need to elevate itself to at least $1.13 to trigger new mine development. But only higher prices of the metal could ensure ample supplies to meet the demand. The report states that the metal prices are likely to hit $1.60 towards the end of this decade.

For nickel, the report predicts the price at $10.75 in 2015. The prices are likely to rise further to $12 in the next year. The Indonesian ban on ore exports will keep the supplies tight. As a result, the prices are unlikely to drop in the next two years. The situation may see a change during late-2016 when new Indonesian facilities are expected to come online, Scotiabank noted.

High nickel prices trigger series of mine restarts

The huge rally in nickel prices has prompted many companies to restart operations at idled mines. Australia based Avebury Nickel Mines Ltd, Poseidon Nickel Ltd and Panoramic Resources Ltd have announced reopening of nickel deposits to cash in on the rally in nickel prices. More global producers are expected to follow suit.

Perth-based Avebury has announced plans to restart its nickel deposits in Tasmania after being shuttered for nearly six years. The company expects to make new investment of nearly $20 million to reopen the mine which is expected to produce nearly 12,000 tons of nickel concentrates per annum. The facility is expected to restart during early-2015.

Poseidon is reportedly mulling over plans to restart operations at a Western Australian nickel mine. Panoramic Resources too have announced plans to restart mining operations at its Copernicus deposits. According to Norilsk Nickel, the up trending Nickel prices may result in many global firms switch over to mine restarts.

Nickel prices have rallied 56% in 2014, following the ban imposed by Indonesian government on nickel exports from the country. According to analysts, the output from restarted mines would not be sufficient enough to prevent nickel from falling into global deficit. The consensus price forecasts by several agencies hint at nickel prices rallying further to $25,000 a metric ton from the current levels.

MCX-nickel (₹1,159): BUY

It has been a good year so far for Nickel. Indonesia banning the exports of unprocessed nickel ore and bauxite in January this year has helped the metal price to surge. The price on the London Metal Exchange is up 34 per cent so far this year.

The domestic nickel futures contract traded on the Multi Commodity Exchange (MCX) that moves in tandem with the global price is also up 34 per cent over the same period. This uptrend remains intact. So, traders with a short- and medium-term perspective can consider taking long position in this contract.

Short-term view: The MCX-nickel futures contract is consolidating sideways between ₹1,110 and ₹1,175 a kg over the last few weeks. A breakout on either side of this range will decide the next leg of move for the contract.

Within the range, the contract is now moving higher from the lower end of this range in the last two weeks. This leaves open the possibility of a rise towards ₹1,175, the upper end of this range in the coming days. Since the preceding trend is up, the bias is bullish.

The contract can witness a strong break and rise above ₹1,175 in the coming days. Such a break can take the contract higher to ₹1,220 in the short-term. Traders with a short-term perspective can initiate fresh long position now. Stop-loss can be kept at ₹1,005 for the target of ₹1,210.

The short-term outlook will turn bearish only if the contract records a decisive break below ₹1,110. But such a break looks less probable because the ₹1,110 level is a strong support. Both the 21-week and the 100-day moving average levels are poised at this level. So declines below ₹1,110 might not be very easy at the moment. However, if the contract falls below ₹1,110 then it can fall to ₹1,080 in the short-term.

Medium-term view: The medium-term outlook for the MCX-nickel futures contract is bullish. The sharp fall in the contract from the high of ₹1,280 recorded in May has reversed in June from the low of ₹1,047.3. Technically, this reversal has happened from just below the 50 per cent Fibonacci retracement support level of ₹1,050. This keeps the overall uptrend that began in January intact. Resistance for the contract is at ₹1,225. A strong break above this level will open the doors for a rally to ₹1,300 over the medium-term. So traders with a medium-term perspective can hold the long position with a slightly wider stop-loss at ₹1,090 for the target of ₹1,280.

The psychological level of ₹1,100 will be a key support for the contract now. A strong break below this level will negate the chances of an immediate rise to ₹1,300 and can drag the contract lower to ₹1,050 instead.

hindubusinessline

Nickel Stockpiles at Record High as China Turns Exporter

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Nickel inventories in warehouses monitored by the London Metal Exchange extended gains to a record after China, the biggest producer and consumer, shipped more metal out than it imported amid a financing scandal.

Stockpiles climbed to 317,874 metric tons, for a 21 percent increase this year, according to the LME data. Exports of refined nickel from China almost tripled in June to 16,737 tons, exceeding imports for the first time ever by 5,723 tons, customs data show. Nickel is used to make stainless steel.

“The recent build is probably attributable to the pick-up in refined nickel exports that came out of China,” Nicholas Snowdon, an analyst at Standard Chartered Plc in London, said by phone. “That is most likely related to some constraints on financing.”

Nickel has gained the most of the six main metals on the LME this year, rising as much as 56 percent after the largest miner Indonesia banned exports of unprocessed ore, a raw material used to make a lower-grade nickel substitute known as nickel-pig iron. Refined nickel production will exceed demand by 44,200 tons this year before turning into shortage of 97,100 tons in 2015, according to Morgan Stanley.

Prices have pared gains to 35 percent this year, to $18,730 a ton, on speculation that supplies are sufficient for now as stockpiles climbed to a record. The probe into metal inventories held at China’s Qingdao port in June led banks to cut back on financing, leading to more exports.

Less Financing

“It’s entirely possible that metal that was being financed, is now not,” said David Wilson, an analyst at Citigroup Inc. in London. “Financing has been more difficult everywhere because of less liquidity being provided.”

Stockpiles of full-plate cathodes increased 36 percent since the start of June in Johor, and almost doubled in Singapore over the same period, according to the LME data. There are two Chinese companies approved to deliver their nickel cathode into LME warehouses.

Refined nickel approved by the LME is used in about one-third of nickel demand as consumers first use scrap, ferronickel, nickel-pig iron or off-grade material, according to Citigroup. The LME’s network of more than 700 depots worldwide doesn’t stretch to China, the biggest consumer of industrial metals.

Warehouses in Johor, Malaysia, have 157,200 tons of refined nickel, or 49 percent of the LME total and are 38 percent higher for this year. The total LME nickel stockpiles equal about 1.5 months of consumption, Anton Berlin, head of strategic marketing at OAO GMK Norilsk Nickel, said in an interview.

Nickel Briquettes

More than 80 percent of refined nickel stored in Johor is in the form of briquettes, which have been delivered throughout this year. The material probably came from Australia, according to Citigroup.

BHP Billiton Ltd. and Minara Resources Ltd., owned by Glencore Plc, are Australian producers whose brands are approved by the LME, according to the bourse’s website. The metal may not be available for immediate release, Wilson said.

“You’ve had this big build-up of briquettes in Johor,” Wilson said. “I suspect we’ll continue to see those briquettes being built. Whether they’re actually available is a very different question. They’re not necessarily available to everybody unless they want to pay a decent premium for them.”

Nickel inventories should start to fall by the middle of next year as stainless-steel producers in China are forced to switch from using nickel-pig iron to other forms of nickel and ultimately the refined metal, according to Standard Chartered. High stockpiles will probably cap prices until a shortage takes hold, National Australia Bank Ltd. said in a report Aug. 4.