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|Observation On Short Supply Of Nickel Is Arising At A Breath|
|= Nickel Shortage In 2010 Is Estimated To Be 10,000 - 56,000 Tons|
An atmosphere felt at The Euro Nickel Conference held in last week was that many of the parties concerned, including analysts, have observed the situation of nickel in 2010 as a short supply. Particularly, many of the persons concerned in stainless steel scrap have commented on a shortage of this scrap in 2010, which should become an initial explosive.|
At this Conference, ELG Haniel, which is the largest dealer of stainless steel scrap in the world, expressed their forecast on supply and demand of stainless steel scrap in 2010 as follows; (1) The world output of crude stainless steel in 2010 is expected to increase by 17.8% and (2) However, the quantity of stainless steel scrap to be generated in 2010 is anticipated to increase by 11.7%, resulting in a shortage of stainless steel scrap in the year.
Apart from this Conference, as regards the international situation on supply and demand of nickel in 2010, Brooke Hunt, an investigation organization in UK, announced in last week that the supply of nickel in 2010 would have a shortage of 10,000 tons. Following this view, CRU also expressed their forecast that the supply of nickel in 2010 is anticipated to have a shortage of 56,000 tons.
The strike at the Sudbury Division of Vale-Inco in Canada already continued for about 9 months is still unable to foresee its resolution. The nickel production at Vale-Inco has shared 10% of the world output and, accordingly, this strike has put a substantial influence on nickel production in the world. Many of the existing nickel producers in the world are also supposed to have been troubled in 2010. The Kwinana nickel refinery of BHP Billiton in Western Australia has been driven to shut down for 2 weeks from the 17th of March (for a shortage of raw materials). Also, the strike gone on from the 4th of March by the stevedores in Finland has hindered to receive raw materials at the Harjavalta nickel refinery and the nickel production at this refinery is anticipated to be influenced from this week.
As for nickel consumption, China will still play the main role of this subject. The output of crude stainless steel in China had a decline for October - December quarter of 2009 but turned to increase actively in 2010. The orders for stainless steel products placed before Chinese mills from the beginning of January - March quarter of 2010 came up to a high level and the consuming industries concerned have a view that the orders for stainless steel products to be placed for April - June quarter have an anxiety to exceed the nominal capacities at Chinese mill. According to a forecast by Macquarie Research, the output of crude stainless steel in China for January - March quarter of 2010 is thought to reach 2.77 million tons, corresponding to 11 million tons on an annualized base. For a reference, China Special Steel Producers Association announced recently that the output of stainless steel in China for 2009 was 8.80 million tons.
An anxiety for a short supply of stainless steel scrap has arisen from the second half of 2009. This shortage on supply of stainless steel scrap has been caused by the fact that the world output of stainless steel in 2009 came down to 25.20 million tons by a reduction of 5% from that in 2008. Therefore, the world production of stainless steel decreased for the successive 3 years and it is certain that a reduction in production of stainless steel scrap in 2009 has caused to restrict the quantity of this scrap to be generated.
Stainless steel mills rely 45 - 50% of raw material on stainless steel scrap. Following stainless steel scrap, mills utilize ferro-nickel or nickel metal as raw materials for production of stainless steel but, reflecting a shortage of stainless steel scrap, price of this scrap has currently risen considerably. Owing to the fact that the operation rate of facilities for production of stainless steel at mills in Europe has been recovering to a level of 85 - 90% on a basic tone, the market price of stainless steel scrap in Europe has risen sharply.
The price of nickel contained in stainless steel scrap has already risen to a level of 96% of LME nickel price, although that at the end of 2009 was 85% of LME nickel price. The Yen price of nickel-based stainless steel scrap in Japan has risen to Yen 200,000 per ton in the beginning of 2010, which has corresponded to US$8.26 per lb. of nickel and also to 83.3% of LME nickel price at that time. For a reference, the price of this scrap in Japan at the end of 2009 was estimated to be on a very low level of 70% of LME nickel price.
The production of nickel-contained pig iron in China is expected to support an increase in production of stainless steel in China and, reflecting a rebound of nickel price in the second half of 2009, has revived. The output of nickel-contained pig iron in China for 2009 is presumed to have reached 95,000 tons on nickel content base and that for 2010 is anticipated to be 135,000 tons per annum. A further increase of the production in 2010 is supposed to depend on the activities in the second half. If LME nickel price could have kept a level of US$9.00 - 10.00 per lb., price of nickel-contained pig iron produced in China would be able to recover an enough power to be competitive on its sales and Chinese producers, including the groups which have shifted from production of ferro-alloys, have planned to move to increase their production of nickel-contained pig iron.
However, new projects to produce several ten thousand tons per annum of nickel-contained pig iron in China are anticipated to commence its commercial production in the second half of 2010 or afterwards and, by that time, stainless steel companies in China have a large probability to have to import nickel metal, ferro-nickel and nickel-based stainless steel scrap for 2010 in the same case as that in 2009.
For a reference, according to a forecast of LME nickel price in April - June quarter of 2010 as released in this week by Societe Generale, the price at LME is anticipated to be US$24,600 per ton on the average (compared to US$21,905 per ton for three-month futures as of the 22nd of March).
|last modified : Mon 29 Mar, 2010 [10:46]|