Future Nickel Prices Trading Fall , recession 2012

Nickel prices fell marginally by 0.26% in futures trade today amid a weak trend in the entire base metals pack overseas on demand concerns. Sluggish demand from alloy-makers in the spot market also put pressure on nickel futures prices.

At the Multi Commodity Exchange, October nickel fell by Rs 2.30, or 0.26%, to Rs 897 per kg, with a business turnover of 980 lots.

The September contract lost Rs 1.40, or 0.16%, to Rs 888.90 per kg in 3,700 lots.

Market analysts attributed the fall in nickel futures prices to a weakening trend in the entire industrial metals pack on the London Metal Exchange (LME) on concerns that Europe's sovereign debt crisis and the prospects for slower growth in China will hurt demand.

In addition, subdued demand from alloy-makers in the domestic spot market also put pressure on prices of the metal, they said.

Meanwhile, nickel lost 1.5% to USD 18,235 per tonne on the London Metal Exchange today.

A market analyst says a slowdown in demand fromChinahas led to a slump in international nickel prices.

Prices for the mineral have fallen by almost 20 per cent in the past fortnight.

At the height of the global financial crisis in 2008 and 2009, more than a dozen nickel mines in WA closed or were placed in care and maintenance.

Analyst Peter Strachan believes nickel producers, who have recently ramped up production since the crisis, could be at risk of closure again.

"As China seems to be the only thing moving these days in the area of iron ore and steel production, and 65 per cent of nickel is used in production of stainless steel, that's just put the downward movement on nickel prices," he said.

Mr Strachan believes nickel prices will continue to fall but the managing director of WA nickel producer Mincor Resources, David Moore, does not agree.

"Just to put it into perspective, during the GFC the nickel price got down to about $4," he said.

"Currently it's at about $8.13 so it's still a long way above those sort of levels.

"Even when it got down to $4 it didn't stay there very long, so I think you know let's not be too gloomy, I don't see mines closing at this point." Mr Moore says if the current price of around $8 US a pound stays stable, local producers will survive.

"It will have no significant effect on the operations other than to depress the profits of the nickel producers so it will certainly impact the amount of cash that they make," he said.

"But, I can't see any of the current nickel sulphide producers inAustraliagoing under or putting substantial production away." Mr Strachan says, however, falling nickel prices are an indicationAustraliawill head towards a recession next year.

"I'm saying we're going to go into a recession in 2012," he said.

"What we tend to see is the recession follows four years after the stock market fall, the global financial crisis was really late 2008."

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