Nickel Report: Nickel drops from last quarter 2000 highs, settles into comfortable range

Editor's note: Allied-Hunter Corporation (Fort Washington, PA) has issued its latest review of the current state of the nickel market. In its latest review, dated Janu. 10, 2001, the company reports on the activity in the market since its last report dated Nov. 30, 2000. To review that report, click here. The information below is from the company with some editing to put the report in the third person.

The London Metal Exchange (LME) nickel price continued trading in the US$6,700 to $7,300/tonne ($3.04–$3.31/lb) range from mid-Oct. 2000 through the end of Dec. 2000. However, this trend was finally broken late last week, with a drop that sunk as low as $6,150—this lasted for about one hour. The price has now settled in an apparent new range of $6,300–$6,600/tonne three-months, with the backwardation still at $200 to $300. The current range for cash nickel is about $6,500–$6,900/tonne or $2.95 to $3.13/lb. The market popped up to the top end of this range Thursday on news that a ship carrying 2,200 tons (4,800,000 lb) of nickel sank off the coast of Japan over last weekend. This was a shipment of nickel matte (intermediate form) from Inco, Ltd. (Toronto, ON, Canada) bound for refining in Japan. While it should not affect availability of finished nickel in the United States, and, in fact, should not affect the overall market fundamentals, the news was enough to support the price, at least during the day Thursday, said Allied-Hunter.

Also providing some degree of support (we presume) is the declining LME stock figure, which stands today at 9,402 tonnes, down more than 2,000 tonnes since Dec. 1, 2000. This is less than 1 percent of annual world consumption. Allied-Hunter analysts said that perhaps the figure is no longer taken seriously or the price would not be continuing its downward march.

There was an announcement from Falconbridge last week to the effect that the company would continue to meet is shipping obligations despite the still ongoing strike. This has no doubt pulled the rug from under the bulls, said Allied-Hunter (for the latest on the Falconbridge strike see Falconbridge files response to union's unfair labor practices charge, resumes initial talks with union).

Short-term, it seems like a bounce in the price could be expected and the news presented here proves that the market remains susceptible to interruptions, said Allied-Hunter. Overall, however, the price now seems in a reasonable range in relation to existing supply/demand conditions.

With contribution from Marie Pompili
Managing Editor, Surface Finishing.com
Email: mpompili@vertical.net
1 (440) 247-4232
Materials provided by Allied-Hunter Corporation

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