Is nickel dulling? As new capacity begins to come online, the nickel market could be set to trend downward.The nickel market could be trending downward as new capacity is closer to coming online. While some market analysts are forecasting a more bearish Bearish
Words used to describe investor attitude. A bearish investor believes that a particular asset or the market as a whole will decline in value.
bearish nickel market throughout the next several quarters, it follows a fairly strong run-up that has taken place during the past several years.
Like many other commodities, nickel, both primary and scrap-based, has seen its fortunes rise in light of substantial purchases by China. With consumption by China surging, nickel alloys Noun 1. nickel alloy - an alloy whose main constituent is nickel
alloy, metal - a mixture containing two or more metallic elements or metallic and nonmetallic elements usually fused together or dissolving into each other when molten; "brass have enjoyed a significant jump in price and demand.
However, after the demand-fueled run-up, a number of market watchers are forecasting a downturn that could extend for several months. Some of the skeptics point to the sharp increase in new capacity that is slated to come online. Simultaneous to the increase in mined nickel output, some industry watchers are forecasting a decline in stainless steel stainless steel: see steel.
Any of a family of alloy steels usually containing 10–30% chromium. The presence of chromium, together with low carbon content, gives remarkable resistance to corrosion and heat. production during the second half of this year, which could result in nickel moving into a surplus, further depressing prices.
MINING UPTICK Uptick
A transaction occurring at price above its previous transaction. In order for an uptick to occur, a transaction price must be followed by an increased transaction price. . According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. several speakers at a Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. conference held in September, a combination of new nickel capacity coming into use, as well as an abundance of scrap nickel and stainless scrap on the market, could keep a lid on prices for the next several years.
According to a report by the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject.
Please [ improve this article] or discuss the issue on the talk page. company Citigroup, mining supplies of close to 100,000 metric tons could be brought online next year, which could add to the existing supply.
One of the most closely watched projects is Inco's long-awaited Voisey Bay, project in Newfoundland.
While there may be a decline in stainless steel production, more optimistic op·ti·mist
1. One who usually expects a favorable outcome.
2. A believer in philosophical optimism.
op industry observers say they feel that the cuts will be only temporary, and nickel and stainless demand should pick up much sooner than earlier expected.
While pessimists say that the new capacity will work to dampen prices, some large mining concerns view the same scenario in a much more upbeat way. In a report by Reuters, Nick Sheard, vice president of exploration for Inco, said that despite all the new capacity, he expected to see significant shortages of nickel on the market through 2009. The nickel shortage, which could be as much as 50,000 metric tons per year, will result from continued strong buying by China, which should more than make up for new mining capacity.
Several nickel traders say that with demand for nickel by China climbing by more than 50 percent during the first half of this year, the combination of nickel production, stainless scrap and inventories are unable to keep up with the strong demand.
In a presentation at the Merrill Lynch Annual Mining Conference, Peter Jones, president and COO for Toronto-based Inco, noted that during the first quarter of the year, China surpassed the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. as the largest consumer of nickel, generating about 16 percent of the world nickel demand.
Even more promising for many traders is the fact that Chinas move to boost its domestic production comes at a time when it is not be able to meet its demands. Jones estimates that Chinas domestic capacity will increase by around 6 million metric tons by the end of this decade, accounting for nearly 70 percent of worldwide stainless steel growth.
TEA LEAVES. Many nickel traders closely watch stainless steel markets to determine where nickel pricing is heading. According to the most recent figures from the International Stainless Steel Forum (ISSF ISSF International Shooting Sport Federation
ISSF International Stainless Steel Forum
ISSF International Stone Skipping Federation
ISSF Impala SS Forum
ISSF Ibm Software Services for Federal ), a Brussels-based non-profit research organization, a total of more than 12.9 million metric tons of the alloy were produced during the first half of 2005, a 5.5 percent increase from production figures for the same time last year.
This growth has come almost entirely from Asia, while production declines are likely in Europe and the U.S. In a recently published market report, Sandro Giuliani, chairman of the Bureau of International Recycling's Stainless Steel & Special Alloys Committee, notes that presently available statistics hint that the downward trend in stainless steel production outside Asia could accelerate. This would inevitably affect nickel markets, as well.
Adding to the trend has been the increased interest in several grades of stainless steel that use smaller amounts of nickel. One area of potential concern for handlers handlers
persons involved in the handling of, for example, circus animals. Includes grooms, milkers, herdsmen, strappers. Used mostly in referring to persons handling animals for show or auction. of stainless scrap is the increased popularity of 200-series stainless steels. This grade of stainless uses far less nickel than traditional stainless.
These changes also could include a swing by some Asian buyers into a 200-series stainless steel that contains far less nickel. However, some bullish Bullish
Word used to describe an investor's attitude. Bullish refers to an optimistic outlook, while bearish means a pessimistic outlook.
bullish watchers feel that this is only a short-term trend Short-term trend
Erratic price movements that last less than three weeks. and that these buyers will move back to a 300-series stainless steel containing a greater amount of nickel.
There appears to be some difference of opinion as to the impact this will have on the nickel market, with Giuliani saying that the move toward forms of stainless steel with low nickel will be balanced by an increase in the production of high-nickel super alloy.
According to Fernando Duranti, managing director of Leghe & Metalli International Srl., an Italian scrap recycling recycling, the process of recovering and reusing waste products—from household use, manufacturing, agriculture, and business—and thereby reducing their burden on the environment. company, scrap dealers scrap dealer n → chatarrero/a
scrap dealer n → marchand m de ferraille
scrap dealer scrap n → will have to segregate seg·re·gate
v. seg·re·gat·ed, seg·re·gat·ing, seg·re·gates
1. To separate or isolate from others or from a main body or group. See Synonyms at isolate.
2. the 300-series stainless steel scrap from the 200-series scrap.
In his presentation during Metal Bulletin's Nickel and Raw Materials Conference, Duranti noted that, "Sellers will have to keep [stainless scrap] segregated, because scrap dealers cannot analyze every piece of scrap that comes into their yards."
Adding to the challenge, he said that while magnetic separation can be used to sort the 300- and 400-series stainless scrap, such technology is not available in the case of the non-magnetic 200- and 300-series stainless steels.
Stainless steel mills, beset be·set
tr.v. be·set, be·set·ting, be·sets
1. To attack from all sides.
2. To trouble persistently; harass. See Synonyms at attack.
3. by London Metal Exchange London Metal Exchange (LME)
A market for trading base metals, where traded options contracts are available against the underlying futures contract. nickel prices that hover An option in Microsoft Internet Explorer that removes the permanent underline from hypertext links. The underline displays automatically and only when the cursor is placed over (hovers over) the link. Hover is available in Tools/Internet Options/Advanced/Underline links. above $15,000 per metric ton, have even begun suggesting that stainless scrap dealers stop shipping pure nickel scrap and supply more stainless scrap as a way of honoring their long-term nickel supply contracts.
Duranti said this novel idea would be a high-risk strategy for any stainless scrap trader given the high price of nickel.
Mills made the suggestion because they get better results using stainless steel scrap in their raw material blend than by using a blend of pure nickel and carbon steel scrap, Duranti said.
In his report, Giuliani further adds, "It is anticipated that this market weakness will continue for the rest of the year and that considerable production cuts will affect austenitic aus·ten·ite
A nonmagnetic solid solution of ferric carbide or carbon in iron, used in making corrosion-resistant steel.
[After Sir William Chandler Roberts-Austen (1843-1902), British metallurgist. qualities in particular, notably among the European steelworks."
He also notes that the Chinese market, which has been locked by increases in that country's domestic production, has witnessed a further drop in scrap demand. This has resulted in situations with surplus scrap supply in relation to mill demand--something Giuliani says, "We would have considered impossible just six months ago."
While the Chinese market holds great promise, in the short term several traders of nickel and stainless say that there is a backup of inventory levels and lower orders to Europe. This situation is helping to create bearish sentiments among some.
OTHER MARKETS. Global primary nickel demand for the 2004-2008 period is expected to increase by 3.5 percent. The improvement is almost exclusively because of China, which is forecast to increase its demand for the material by 26 percent throughout the five-year period. This increase will more than offset demand from other regions of the world, which are forecast either to be flat or to post sharp declines. Japan is expected to see demand drop by 6.5 percent, while domestic demand in the United States could fall by around 1.4 percent during the five years, according to Citigroup.
Another area that holds some promise for handlers of the scrap metals is India. This country could show some fairly good growth prospects, although the short-term market is not as robust. However, along with China, India could be a good outlet for more nickel-bearing scrap coming from North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and Europe. The ISSF notes that stainless steel production in India increased by 10 percent the first half of this year, compared to figures for the same time last year.
Similar to many other commodities, nickel and stainless markets are being more widely influenced by demand from Chinese markets. Recent statistics show that despite the strong Chinese economy, global stainless steel growth has slowed down from 7.8 percent last year to 5.7 percent this year. With stainless steel growth slowing, demand for nickel also has eased.
While the long-term trend for stainless steel production growth is good, the short-term outlook for stainless scrap prices, which have suffered more than nickel prices, isn't encouraging, Guilianai writes, adding that stainless steel producers will continue to rein in to check the speed of, or cause to stop, by drawing the reins.
to cause (a person) to slow down or cease some activity; - to rein in is used commonly of superiors in a chain of command, ordering a subordinate to moderate or cease some activity deemed excessive.
See also: Rein Rein output in the fourth quarter.
INCO acquires Falconbridge
The respective boards of directors for Toronto-based companies Inco Ltd. and Falconbridge Ltd, have approved Inco's acquisition of Falconbridge. The combined company will be one of the world's largest nickel and copper mining and metals companies.
The combined company will produce nearly 735 m on pounds of nickel this year, and forecasts show that production level climbing to around 1 billion pounds by the end of 2009.
Its global copper production will total 1.33 billion pounds this year, climbing to about 2.4 billion pounds by 2009.
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