Nickel mining commodity price for 3 month delivery fell 3.2 percent to $19,125 a metric ton on the London Metal Exchange. Nickel price has dropped 23 percent this year amid concern that Europe’s debt crisis will cripple global economic growth, curbing demand for the metal.
Nickel outlook 2012 after three straight years of declines, RBC forecasts a rebound in global nickel demand of 17.1% in 2010 followed by growth of 8.4% in 2011 and 9.5% in 2012. “China remains the main driver of nickel demand growth; however, demand outside of China has rebounded strongly in 2010 on the back of restocking. Demand growth for nickel in stainless steel has softened in the second half of 2010 on lower stainless steel production and a lower austenitic ratio, as producers place increased emphasis on ferric grades of stainless steel containing little or no nickel. We expect an improvement in nickel demand in stainless steel in 2011.
“Global refined production decreased for a second year in a row in 2009 on the back of production curtailments, project delays and the Vale strikes. The resumption of production at Vale’s North American operations and the restart of idled capacity and strong nickel pig iron production at current high price levels, however, have resulted in a forecasted 7.4% rebound in production in 2010. We expect further growth in production of 10.4% in 2011 and 9.6% in 2012 as new projects begin to come on stream.
“Our analysis suggests that inventories will remain well above the critical level throughout our forecast period. Our forecasted rebound in demand in 2010 and beyond looks likely to be matched by increases in supply, thereby leading to balanced markets and no significant drawdown in inventory.
“The resumption of production at Vale’s Sudbury and Voisey’s Bay operations, combined with softness in global stainless steel demand have pushed the market into surplus in the second half of 2010 after a substantial deficit in the first half of the year. We expect increasing downward pressure on prices as a result. In 2011 and 2012, we expect prices to move toward the upper end of the cost curve to limit production increases and balance the market. We forecast an average price of $9.78/lb in 2010, $9.00/lb in 2011, $8.00/lb in 2012, $8.50/lb in 2013 and $8.50/lb in 2014. Our long-term price forecast is $7.50/lb in 2010 US dollars.
Nickel forecast
Investment Demand - Investment demand remains a key driver of commodity prices, thereby leaving prices vulnerable to increased volatility. The emergence of physical ETFs could have a positive influence on prices.
Economic Growth - If sustained growth in the developed world is more muted, then the market could remain in surplus in 2011.
China - Slower demand growth in response to government measures to cool economic growth or higher nickel pig iron production could lead to a larger surplus.
Supply - Currently high nickel prices, if sustained, could lead to further production restarts and higher supply growth than we currently forecast.
New Capacity - Delays or difficulties in bringing new projects (many of which rely on new technologies) on stream could result in tighter markets and higher prices than we are currently forecasting.
“Global refined production decreased for a second year in a row in 2009 on the back of production curtailments, project delays and the Vale strikes. The resumption of production at Vale’s North American operations and the restart of idled capacity and strong nickel pig iron production at current high price levels, however, have resulted in a forecasted 7.4% rebound in production in 2010. We expect further growth in production of 10.4% in 2011 and 9.6% in 2012 as new projects begin to come on stream.
“Our analysis suggests that inventories will remain well above the critical level throughout our forecast period. Our forecasted rebound in demand in 2010 and beyond looks likely to be matched by increases in supply, thereby leading to balanced markets and no significant drawdown in inventory.
“The resumption of production at Vale’s Sudbury and Voisey’s Bay operations, combined with softness in global stainless steel demand have pushed the market into surplus in the second half of 2010 after a substantial deficit in the first half of the year. We expect increasing downward pressure on prices as a result. In 2011 and 2012, we expect prices to move toward the upper end of the cost curve to limit production increases and balance the market. We forecast an average price of $9.78/lb in 2010, $9.00/lb in 2011, $8.00/lb in 2012, $8.50/lb in 2013 and $8.50/lb in 2014. Our long-term price forecast is $7.50/lb in 2010 US dollars.
Nickel forecast
Investment Demand - Investment demand remains a key driver of commodity prices, thereby leaving prices vulnerable to increased volatility. The emergence of physical ETFs could have a positive influence on prices.
Economic Growth - If sustained growth in the developed world is more muted, then the market could remain in surplus in 2011.
China - Slower demand growth in response to government measures to cool economic growth or higher nickel pig iron production could lead to a larger surplus.
Supply - Currently high nickel prices, if sustained, could lead to further production restarts and higher supply growth than we currently forecast.
New Capacity - Delays or difficulties in bringing new projects (many of which rely on new technologies) on stream could result in tighter markets and higher prices than we are currently forecasting.
Infocommodity - Positive macro economic indication from both Europe and the US helped most of the commodities to bounce back and register gains at the multi Commodity Exchange (MCX) for the week of Oct 3October 8.
The European Central Bank (ECB) introduced the system of purchasing covered bonds in a bid to encourage bank lending. The ECB will also introduce yearlong loans so as to give the banks a steady supply of cash through January 2013. This is bullish for base metals and Energies.
Payroll and Employment data from the US showed that employers employed more people in September while increasing earnings and working hours. This is bullish for metals and Energies.
From Europe, watch out for the French and Italian industrial production due next week. Also look out for German trade data. The ECB president Trichet is also expected to speak next week.
From the US, watch for figures relating to trade balance and unemployment claims. Also look out for data on retail sales and consumer sentiment. The FOMC meeting is also scheduled next week
In Energy space, the US inventory data on Crude Oil and Natural Gas due on Thursday.
MCX Gold December: Rallies to 26260/26360 to hold for 25800/25500 now. However, a strong consolidation above 26400 could dent this bullish view.
S1 25500 S2 25000 R1 26400 R2 27140
MCX Silver December: Prices to trade in between 49000 51600 now, break of either level could decide the momentum.
S1 49000 S2 46800 R1 51600 R2 53000
MCX Copper November: A strong consolidation above 340 indicates buying momentum towards 360. However, a direct fall below 338 could dent this bullish view.
S1 338 S2 327 R1 348 R2 366
MCX Lead October: While above 96.70, prices to test 98/99.
S1 94 S2 90.80 R1 96.70 R2 100.60
MCX Zinc October: Strong consolidation around 91 indicates bullishness towards 95.
S1 90.60 S2 87 R1 96 R2 98
MCX Nickel October: While above 940, prices could test 980.
S1 920 S2 890 R1 965 R2 990
MCX Crude October: Pull backs to 3940 looks likely. However, failure to cross 4000 could again drag prices lower to 3740/3600.
S1 3700 S2 3600 R1 3950 R2 4060
MCX Natural Gas Oct: While below 183, prices could test 175.
S1 175 S2 171 R1 183 R2 188
The European Central Bank (ECB) introduced the system of purchasing covered bonds in a bid to encourage bank lending. The ECB will also introduce yearlong loans so as to give the banks a steady supply of cash through January 2013. This is bullish for base metals and Energies.
Payroll and Employment data from the US showed that employers employed more people in September while increasing earnings and working hours. This is bullish for metals and Energies.
From Europe, watch out for the French and Italian industrial production due next week. Also look out for German trade data. The ECB president Trichet is also expected to speak next week.
From the US, watch for figures relating to trade balance and unemployment claims. Also look out for data on retail sales and consumer sentiment. The FOMC meeting is also scheduled next week
In Energy space, the US inventory data on Crude Oil and Natural Gas due on Thursday.
MCX Gold December: Rallies to 26260/26360 to hold for 25800/25500 now. However, a strong consolidation above 26400 could dent this bullish view.
S1 25500 S2 25000 R1 26400 R2 27140
MCX Silver December: Prices to trade in between 49000 51600 now, break of either level could decide the momentum.
S1 49000 S2 46800 R1 51600 R2 53000
MCX Copper November: A strong consolidation above 340 indicates buying momentum towards 360. However, a direct fall below 338 could dent this bullish view.
S1 338 S2 327 R1 348 R2 366
MCX Lead October: While above 96.70, prices to test 98/99.
S1 94 S2 90.80 R1 96.70 R2 100.60
MCX Zinc October: Strong consolidation around 91 indicates bullishness towards 95.
S1 90.60 S2 87 R1 96 R2 98
MCX Nickel October: While above 940, prices could test 980.
S1 920 S2 890 R1 965 R2 990
MCX Crude October: Pull backs to 3940 looks likely. However, failure to cross 4000 could again drag prices lower to 3740/3600.
S1 3700 S2 3600 R1 3950 R2 4060
MCX Natural Gas Oct: While below 183, prices could test 175.
S1 175 S2 171 R1 183 R2 188
