360° Coverage : Why Ukraine Crisis Could Drive Nickel To $25,000/Tonne

2 Updates

Why Ukraine Crisis Could Drive Nickel To $25,000/Tonne

May 5 2014, 11:42am CDT | by

Nickel has enjoyed a solid price spurt in recent months, fuelled by fears over heavy supply disruptions after Indonesia — home to around a fifth of total nickel production — placed an export ban on...

Filed under: news

 
 
 

24 weeks ago

Why Ukraine Crisis Could Drive Nickel To $25,000/Tonne

May 5 2014, 11:42am CDT | by

Nickel has enjoyed a solid price spurt in recent months, fuelled by fears over heavy supply disruptions after Indonesia — home to around a fifth of total nickel production — placed an export ban on nickel ore back in January.

The move was prompted by a 2009 law calling for more domestic refined output, a situation which is significantly hampering Chinese production of nickel pig iron (NPI) as ore shipments dry up.  As Indonesian refining capacity could be described as inadequate at best, nickel prices have shot 35% higher since the turn of the year, striking 14-month peaks above $18,700 per tonne in the process and looking poised for another move skywards.

Meanwhile, the evolving political situation in Ukraine is also adding pressure to the nickel market, and analysts reckon that a backdrop of escalating trade restrictions on Moscow from the West could add fresh ammunition for the metal to surge still higher.

Market balance under the microscope

Indeed, Bank of America-Merrill Lynch upped its price forecasts in recent weeks in anticipation of lingering output issues worldwide, and fully expects the metal to strike $25,000 within the next 12 months.

The institution reckons that issues in Indonesia are set to push the nickel market into deficit next year, while the possibility of curbs on Russian shipments could drive stocks to critically low levels in coming months. “Possible sanctions on Russia, which supplies 12% of global nickel production, have recently accelerated price increases,” the bank notes.

Over the coming days, we would follow developments around Ukraine closely [as] any sanctions which may limit nickel shipments would in all likelihood add to the rally,” it adds.

Russia’s Norilsk Nickel is the single-largest producer of the metal, and group production of 285,000 tonnes last year accounted for more than 15% of the global total. Along with energy giant Gazprom, the mining giant has been targeted at one of the more likely recipients of strict economic sanctions.

Bank of America-Merrill Lynch says that it expects nickel to average $16,091 per tonne in 2014, up from $15,034 last year, before marching on to $17,839 and $18,000 in 2015 and 2016 respectively. But as long as the sales ban in Indonesia persists, and intensifying military action in Eastern Europe intensifies trade curbs on Russia, nickel prices could easily surge past these readings.

Demand on the rise

Meanwhile, an environment of solidly-recovering nickel demand, helped by improving financial conditions in Europe and a continued uptick in the US economy, is expected to exacerbate tightness in the metal’s market balance.

In particular, booming production from stainless steel mills — the sector is responsible for around two-thirds of global nickel off-take — is expected to result in fresh output records this year. Indeed, metals consultancy MEPS expects total crude stainless steel output to hit a new record of 39.5 million tonnes in 2014, up 3.6% from last year’s all-time high of 38.1 million tonnes.

Sucden Financial agrees that robust organic growth should provide a boon to stainless steel demand, with consumption rising faster than the majority of the base metals. This situation “… should carry nickel demand up with it,” the broker argues, while “significantly more interest from consumers to restock is likely this year ahead of next year’s move into a significant deficit.”

For the time being nickel stock levels remain at healthy levels. London Metal Exchange inventories have steadily moved higher since 2011, and although outflows have stepped up in recent weeks levels still stand close to a record 290,000 tonnes. Meanwhile China has been stockpiling vast amounts of ore over many months in anticipation of Indonesia’s export ban.

But as sales restrictions from South-East Asia look set to linger, and the political situation in Ukraine looks set to get a whole lot worse, nickel prices — helped by a steadily-improving demand picture — could be set for further price appreciation in the near future.

 
Update
2

8 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workf ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

8 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tra ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

World Bank approves $75 mn for pastoralists in Horn of Africa
Nairobi, Oct 26 (IANS) The World Bank has approved an additional credit of $75 million to improve the livelihoods and resilience of pastoralists in the Horn of Africa.
 
 
Slovakia to provide further financial help in fighting Ebola
Bratislava, Oct 26 (IANS) Slovakia planned to provide some 90,000 euros ($114,000) to countries affected by Ebola to help with the construction of field hospitals, foreign ministry said Saturday.
 
 
Mauritania closes border with Mali after Ebola death
Nouakchott, Oct 26 (IANS) Mauritania has closed its border with Mali after an Ebola death was confirmed in the border area this week, a health official said Saturday.
 
 
Number of Ebola cases crosses 10,000: WHO
Geneva, Oct 25 (IANS/EFE) The World Health Organisation (WHO) confirmed Saturday that the number of Ebola cases has risen to more than 10,000 in the eight affected countries, two of which, Nigeria and Senegal, had recently been declared free of the virus.
 
 
 

Latest from the Network

Second MERS case reported in Qatar
Doha, Oct 23 (IANS) A 43-year-old man in Qatar has tested positive for Middle East Respiratory Syndrome (MERS) in the second confirmed case of the deadly virus in 10 days, media reported Thursday. The patient had...
Read more on Business Balla
 
Two people die in Pakistan bomb blast
Islamabad, Oct 23 (IANS) At least two people were killed and 12 others injured in an explosion that took place in Pakistan's Balochistan province Thursday, media reported. The bomb was planted on a motorcycle, Dawn...
Read more on Politics Balla
 
Trott extends contract with Warwickshire till 2017
London, Oct 23 (IANS) England batsman Jonathan Trott, whose mental issues led to his abrupt departure from last winter's Ashes tour, has confirmed his successful comeback to competitive cricket by signing a new three-...
Read more on Sport Balla
 
Srikanth, Kashyap big movers in BWF rankings
Kuala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest Badminton World Federation (BWF) rankings released Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Alvin Stardust dead
London, Oct 23 (IANS) English singer Alvin Stardust died after a short illness. He was 72. Stardust's manager confirmed the news about his demise Thursday, reports mirror.co.uk. He was recently diagnosed with...
Read more on Celebrity Balla
 
Indian man reunited with family after 40 years
Dubai, Oct 23 (IANS) An Indian man, who had disappeared from his hometown in Kerala nearly 40 years ago, has been found by his family at a hospital in Dubai in the UAE, a newspaper report said. Now in his 60s, Abdulla...
Read more on Politics Balla
 
Srikanth, Kashyap, Saina rise in world rankings
Kala Lumpur, Oct 23 (IANS) Indian men shuttlers Kidambi Srikanth and Parupalli Kashyap jumped seven places each in the latest released Badminton World Federation (BWF) rankings Thursday while Olympic bronze medallist...
Read more on Sport Balla
 
Flintoff signs for Big Bash side Brisbane Heat
Brisbane, Oct 23 (IANS) Former England captain and all-rounder Andrew Flintoff, who retired from international cricket in 2009, Wednesday confirmed that he will play for Brisbane Heat in the Big Bash League (BBL) this...
Read more on Sport Balla
 
OPEC daily basket price falls again
Vienna, Oct 23 (IANS/WAM) The basket of 12 crude oils of the Organization of Petroleum Exporting Countries (OPEC) closed at $81.94 a barrel Wednesday compared to $82.09 Tuesday, the OPEC Secretariat said. The new OPEC...
Read more on Business Balla
 
Lopez to sign multi-million dollar deal?
Los Angeles, Oct 23 (IANS) Singer-actress Jennifer Lopez is reportedly in the final stages of securing a multi-million dollar deal to perform in Las Vegas. The 45-year-old is being offered $350,000 per show at The...
Read more on Celebrity Balla