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General Review Of Nickel In 2009 And Its Outlook For New Year (1)
= Strike At Sudbury / Canada, Having Continued For Long Period, China Extraordinarily Imported Nickel
The world market of nickel in 2009 had developed on the spindle, which the strike gone on at Sudbury Division of Vale-Inco in Canada has continued for a long period and China imported extraordinary quantities of nickel in the first half of 2009. LME nickel price in 2009 had recorded US$21,070 per ton (US$9.557 per lb.) on the 13th of August as the highest one and US$9,600 per ton (US$4.354 per lb.) on the 25th of March as the lowest one. A differential between these two prices was US$11,470 per ton. The differential of LME nickel prices between highest one and lowest one was US$24,425 per ton in 2008 and US$29,145 per ton in 2007 and, in comparison with these differentials of LME nickel prices, a volatility of LME nickel price in 2009 had turned to be a small extent.

LME nickel prices averaged on movements throughout the full year of 2009 were <> US$14,700.02 per ton (US$6.666 per lb.) for cash and <> US$14,777.71 per ton (US$6.703 per lb.) for three-month futures, having fallen by 30% compared with those in the preceding year of 2008. However, at the beginning of 2009, a leading analyst forecasted that the average price of LME nickel in 2009 would be in the range of US$11,000 - 13,000 per ton (US$5 -6 per lb.). In comparison with this anticipation of LME nickel price in 2009, the actual prices of LME nickel on average for 2009 had converged to a little high level.

Nickel stocks at LME as of the 31st December of 2009 approached an extraordinary high level of 150,000 tons, which were compared to 78,822 tons at the end of 2008. While a pressure was being put on the supply situation of nickel throughout 2009, the following factors had underpinned a large collapse of nickel price. Namely, (1) In the first half of 2009, China imported 300,000 tons of nickel metal as an extraordinary case., (2) In the second half, the strikes gone on from July at Sudbury Division and Voisey's Bay Mine of Vale-Inco in Canada have still continued up to this moment and this labor dispute has caused to reduce nickel production by 86,000 tons., and (3) The Goro nickel project in New Caledonia by Vale-Inco (with annual capacity to produce 60,000 tons of nickel) has postponed to commence its commercial production from 2009.

Also, a 60 - 65% of the world demand for nickel has been shared by production of stainless steel and, from this point of view, it was favorable for nickel that the output of crude stainless steel in 2009 had been more improved than that anticipated at the beginning of the year. The world output of crude stainless steel in 2009 was estimated at the beginning of the year to be 22.00 - 23.00 million tons but the actual production in 2009 had reached a level of 24.50 - 24.70 million tons, which decreased by 6 - 8% from that in 2008 but sustained the bottom of nickel price. The background of this aspect was due to the fact that China had a considerable increase of 25% in production of stainless steel for 2009 compared with that for 2008. On the other hand, when the quantities of crude stainless steel produced in the western regions for 2009 are compared with those for 2008, Europe decreased by 25%, the USA decreased by 18% and Japan decreased by 28%, having shown a considerable decline. These substantial decreases in production of crude stainless steel in the western countries had accelerated a volatility of nickel price.

The producers, who are able to produce nickel at US$6.70 per lb. on the average and to maintain a profitability for nickel production, have been restricted and the cases, which a nickel refinery has suspended to operate for a long period (Xstrata Nickel = Falcondo in Dominica to produce 19,000 tons / year) and the sales of Yabulu nickel refinery of QNI and Ravensthorpe nickel project by BHP Billiton were materialized, had arisen successively/ Also, the world output of nickel in 2009 was estimated to be a scale of 1,300,000 tons as decreased by 84,000 tons (6%) from that in 2008. The producers, who implemented a reduction of nickel production in 2009, are supposed to have reached 12 - 13 companies, which included Norilsk Nickel of Russia as the largest producer of nickel in the world and were more than half of nickel producers.

A remarkable case, having increased nickel production in 2009, was that the Gwangyang plant of SNNC (a joint venture company established by Posco / South Korea and SMSP / New Caledonia to produce newly ferro-nickel in South Korea) inaugurated from October of 2008 and produced 20,000 tons of nickel in ferro-nickel in 2009. It took a certain time for calcination of a large diameter electrode but this plant could have maintained a stable operation. The annual capacity at this plant is to produce 60,000 tons of nickel in ferro-nickel and SNNC is scheduled to produce more than 27,000 tons of nickel in ferro-nickel in 2010. Apart from this new nickel production in South Korea, the second phase of the Coral Bay nickel project in Palawan Island of Philippines (planned to produce 10,000 tons / year of nickel by HPAL method) commenced to operate in 2009.

Also, the output of nickel-contained pig iron (including low grade ferro-nickel) in China for 2009 was initially anticipated to decrease to a scale of 30,000 - 40,000 tons per annum of nickel by reason of its high production cost but a substantial increase in production of stainless steel in China in 2009 had caused to revive the production of nickel-contained pig iron from the second half of 2009. Accordingly, the output of nickel-contained pig iron in 2009 was estimated to be more than 100,000 tons per annum of nickel. Particularly, in consequence of that LME nickel price once rose steeply to a nearer level to US$10 per lb in August of 2009, the production of nickel-contained pig iron in China had revived, because the cost to produce nickel-contained pig iron in China is estimated at US$7 - 8 per lb. of nickel.

The world consumption of nickel in 2009 was supposed to be 1,270,000 tons, 30,000 tons of which became a surplus. According to the data compiled by a nickel producer, a global balance on supply and demand of nickel in 2009 was <> April - June quarter : a short supply of 30,000 tons and <> July - September quarter : a short supply of 85,000 tons, having improved an apparent balance on supply and demand of nickel. However, the nickel position in October - December quarter turned again to an oversupply, which resulted in having brought organized investors in liquidation of long position taken by them. The reason was that stainless steel mills in China and Europe implemented a substantial reduction in their production of stainless steel in October - December quarter of 2009, having caused a sudden and sharp increase of nickel stocks at LME. A fever in China to import more nickel cooled down in the same quarter and, in order to decrease the excessive stocks of nickel (said as 140,000 tons), China resumed to export nickel metal (on a scale of 30,000 tons / year).

(To be continued)
last modified : Wed 27 Jan, 2010 [10:09]
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