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| General Review Of Nickel In 2007 And Its Outlook For New Year (2) |
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( Continued from our No.9429 dated February 20, 2008 ) According to a survey by INSG based on the Hague of Netherlands, the world supply of nickel in 2007 had a surplus. Also, INSG released in October of 2007 the data on supply and demand of nickel in the year and, according to this report, the quantities of nickel produced and consumed in the world for 2007 were estimated at <> production : 1,470,000 tons and <> consumption : 1,350,000 tons. In addition, those for 2008 are anticipated by INSG to be <> production : 1,570,000 tons and <> consumption : 1,470,000 tons, remaining on the same pattern of oversupply. As a matter of fact, when the supply and demand of nickel in 2007 are traced by month, the pattern of oversupply continued from the beginning of 2007 and this aspect certainly differed from the short supply of nickel as seen in 2006. LME nickel stocks started with 6,570 tons as of the beginning of 2007 and closed on 47,940 tons as of the end of 2007. From this point of view, it is certain that a balance on supply and demand of nickel in 2007 transformed to a type of oversupply. The speculative funds of US$50 billion were invested in LME base metals in 2007, consisting of 27% of index funds, 37% of hedge funds and remaining 36% of CTA and propdesk funds. These speculative funds played the main role of operating artificially LME nickel prices to rise steeply in the first half of 2007 but the realities on supply and demand of nickel in 2007 already turned to an oversupply from April - June quarter to July - September quarter. LME nickel stocks as of the beginning of 2007 decreased to 6,570 tons but increased by 41,370 tons to 47,940 tons at the end of 2007. Being encouraged by higher nickel prices, the existing producers operated at full capacity to produce more nickel and also medium and small nickel mines in Philippines, Indonesia, Western Australia, and so on endeavored to mine more nickel ore. The Voisey's Bay Nickel Project in Canada developed by Vale-Inco has been increasing their nickel production and this expansion of nickel production contributed to the world supply of nickel. The undercurrent of this increased nickel supply in 2007 was due to the expanded production of 200 series stainless steel (containing lower nickel) and the increased production of nickel-contained pig iron in China. The world output of 300 series stainless steel (containing higher nickel) in 2007 is estimated to have shared 60% of the whole stainless production, which had a substantial decline from 75% in 1999. On the background which nickel prices had risen steeply in the international market, large nickel projects were able to promote to raise funds in 2007 and the pending projects progressed to materialize. In the last 10 years, only two large new nickel projects (Moro de Niquel / Venezuela and Murrin Murrin / Australia ) were industrialized and this aspect became a remote cause to emerge a short supply of nickel in 2006. Since giant natural resources companies have entered into the nickel industry from 2007, huge funds to be required to invest in nickel projects have been guaranteed by them. The oligopoly of the metals resources industry has been promoted by major enterprises and the shares of nickel production held by top three companies have been increasing. However, an extent of the oligopoly in the nickel industry shared by them is still lower than that in the steel industry. It is marked to see whether this oligopoly of the nickel industry is deepened further by large nickel projects or not. The nickel projects, which have been decided the times to complete, are as per the table attached hereto. Namely, these nickel projects scheduled to complete during 2008 to 2014 are as follows ; <> Ferro-Nickel project in South Korea by Posco and SMSP / New Caledonia to complete in January - March quarter of 2009 ( to produce 30,000 tons / year of Ni in ferro-nickel ), <> Moa Nickel project in Cuba by Sherritt / Canada to complete by end of 2010 ( to produce 22,000 tons / year of Ni ), <> Ravensthorpe Nickel project in Western Australia and Expansion Plan at QNI in Australia by BHP Billiton to complete in the first half of 2008 ( to produce 50,000 tons / year of Ni ), <> Goro Nickel project in New Caledonia by Vale-Inco to complete in 2009 ( to produce 60,000 tons / year of Ni ), <> Berro Alto Nickel project in Brazil by AAC to complete in 2010 ( to produce 36,000 tons / year of Ni ), <> Ambatovey Nickel project in Madagascar as a joint venture by three companies of Canada, Japan and South Korea to complete in 2013 ( to produce 60,000 tons / year of Ni ), <> Koniambo Nickel project in New Caledonia by SMSP and Xstrata to complete in 2013 - 2014 ( to produce 60,000 tons / year of Ni ), <> Nickel projects in Brazil by Vale-Inco, consisting of <> Onca-Puma Nickel project in Para State to complete in 2009 ( to produce 58,000 tons / year of Ni ) and <> Vermelho Nickel project in Carajas State to complete in 2012 ( to produce 46,000 tons / rear of Ni ), and so on. These nickel projects are expected to become powerful and new sources for nickel supply. Originally, according to an opinion by the parties concerned in nickel, there is no guarantee to progress these new nickel projects on schedule. The application of HPAL method has caused to complicate its technique for operation and, in addition to the problem which it will take a long period to master HPAL method, it has been well known that the cost for this operation is unexpectedly expensive. It is said that an excessive anxiety for nickel supply on a long run ( to turn to be oversupply ) is not necessary, but it is not negligible to see a possibility, which new large nickel projects scheduled to complete in 2010 and afterwards will put a pressure on the nickel market. A key point is that China has intended to increase their production of stainless steel to an unlimited extent. In consequence of that stainless steel companies in Chna have strenuously competed each other to strengthen the facilities for production of stainless steel, the total capacity to produce stainless steel in China has expanded to a larger scale than 15.00 million tons per annum and, according to a view by Samancor Chrome of South Africa, China is anticipated to have the capacity to produce 20.00 million tons per annum of stainless steel in 2010. The output of stainless steel by China in 2006 increased by 60% compared with that in 2005 and that in 2007 is estimated to have an expansion of 32% compared to that in 2006. It is supposed that the quantity of stainless steel produced by China in 2007 would have covered the demand for stainless steel products from domestic market. Also, China is anticipated to produce 8.50 million tons of stainless steel in 2008 but, according to an estimation, if China could have produced 8.50 million tons of stainless steel in 2008, there is a probability to turn to be an oversupply of 1.20 million tons. The world output of stainless steel in 2007 came to 30.20 million tons and one of the companies concerned in stainless steel ( ELG Haniel / Germany ) has a forecast that the world production of stainless steel in 2008 will reach 33.20 million tons. However, it is wondered how does China position their production of stainless steel under the present aspect. An issue of the nickel industry is thought to be clarified together with an anxiety for factors to raise a disturbance in the stainless steel industry. However, even a growth of stainless steel has a possibility to be restricted by an anxiety for the cutback on production of ferro-chrome caused by a shortage of electricity supply. In case that the output of ferro-chrome in South Africa is decreased by 10 - 20% in 2008, the world production of stainless steel will be certainly influenced, because it is not possible to produce stainless steel without ferro-chrome. It occurred that, when production of stainless steel was decreased, even the soared nickel prices fell to a considerable extent in June of 2007. A shortage of nickel has developed the way to produce stainless steel, containing lower nickel, (such as chrome-based products and 200 series stainless steel ) but a short supply of ferro-chrome is considered to cause the cutback on production of stainless steel. |
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| last modified : Tue 26 Feb, 2008 [11:38] |
