# Nickel - Bullish technically and fundamentally



## RichKid

Anyone exposed to Nickel, either through futures, stocks or otherwise?
I'm trying to gain leverage to what appears to be the start of a strong run this year . Will post more on the fundamentals later but here's a chart for the TA people. Not sure what the contract types are but this one is for 'cash seller and settlement'. The chart is from the London Metal Exchange. It's either an ascending triangle or a triangle, eitherway looks bullish to me.

Please see the other threads if you want to post purely on local Nickel stocks you favour and keep this thread restricted to Nickel price.  Search for 'Nickel' under search tool to find Nickel stocks on ASF.

Any comments on where Nickel is headed and why are welcome. It'll be nice to see some of you 'hot' commodities traders come out of the woodwork on ASF!!


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## markrmau

*Re: Nickel- Bullish technically and fundamentally*

I have MCR, but unforunately bought after last spike so am currently sitting on $700 loss.

On one hand, there has been a lot of hedge fund speculation, leading to some volatitilty in nickel, particularly after the recent US interest rate rises.

On the other hand, I went to china about 2 years ago, an if they replaced just 10% of the bamboo scaffolding with steel, nickel prices will go through the roof.

On my third hand, a lot of chineese steel import has possibly been due to defacto Yuan revaluation speculation by buying into shanghai and other cities property - a buble in real danger of collapse.

Overall I am not sure. I am very close to stop loss on mcr.


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## whisky6210

*Re: Nickel- Bullish technically and fundamentally*

I've been following nickel verry closely for a while, particularly in the Kambalda region of W.A.
Most of the mines are spin-offs from WMC with an estimated lifespan of 4 years (according to reports)
Others are nickel in laterite which WMC would not have a bar of....look what happened to Preston ! also Annaconda (now minara).....Heron is also nickel in laterite, however they spun off their nickel in sulphide and formed Pioneer (pio)
So it's the old story of "back to basics".
Just in closing, someone made the comment if China follows the West and converts from chopsicks to knives and forks the world will run out of nickel.
Hope this helps with your fundamentels.........


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## RichKid

*Re: Nickel- Bullish technically and fundamentally*



			
				whisky6210 said:
			
		

> ....if China follows the West and converts from chopsicks to knives and forks the world will run out of nickel.
> Hope this helps with your fundamentels.........




Ha Ha! good point, it's easy to get carried away with the China story. I did see some figures on Nickel inventory and supply/demand etc, must dig it up sometime, I think one of the Nickel co's I was watching had it in an investor presentation. I'll post as soon as I find it although it my be a bit biased coming from a Nickel co.  If steel demand is going to grow, as is the consensus, then Nickel will too, I've seen various remarks about using Nickel substitutes (or lower percentages of Nickel) and the like but the underlying demand is still strong once alternatives are considered.

Here's a graph on how much Nickel is around, not sure how much is 'hidden' and not counted but it's looking pretty bearish, in the near term we may see a fall in the price if the stock levels look like they'll increase abit (appears so from the chart). It has found some support and there have been higher bottoms since Jul 2004 so in the very near term we may see a fall in the Nickel price but the overall long term picture is different imo.


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## BREND

*Re: Nickel- Bullish technically and fundamentally*

Due to the rising base metal prices, demand for most base metals in China had slowed down, except nickel and lead. China had even recently reduced import tax on nickel, so as to cater to the rising demand of nickel.

There are many news of substitution for nickel, such as using less nickel for stainless steel production. But so far, I have yet to see any slow down in demand for nickel on a global basis.

But the worrisome for nickel is that commodity funds are having nickel interest on nickel these days. Commodity funds have been doing their re-balancing, selling off metals that have risen a lot in 2006, and buying metals that are still laggards. Since nickel had risen more than 200% in 2006, it is an obvious sell candidates for commodity funds.

http://basemetal-trading.blogspot.com/


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## moses

*Re: Nickel- Bullish technically and fundamentally*



			
				BREND said:
			
		

> Commodity funds have been doing their re-balancing, selling off metals that have risen a lot in 2006, and buying metals that are still laggards.



I suppose the same could be said for Zinc?


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## BREND

*Re: Nickel- Bullish technically and fundamentally*



			
				moses said:
			
		

> I suppose the same could be said for Zinc?




You are very right! I heard that AIG Commodity Fund is still off nickel and zinc as part of their re-structuring strategy for 2007.


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## BREND

*Re: Nickel- Bullish technically and fundamentally*



			
				BREND said:
			
		

> You are very right! I heard that AIG Commodity Fund is still off nickel and zinc as part of their re-structuring strategy for 2007.




Found the details here:
http://basemetal-trading.blogspot.com/2006/12/commodity-index-re-balancing-could.html


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## moses

*Re: Nickel- Bullish technically and fundamentally*



			
				BREND said:
			
		

> Found the details here:
> http://basemetal-trading.blogspot.com/2006/12/commodity-index-re-balancing-could.html



Thanks. It helps make sense of a few SP's atm.


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## BREND

Nickel price is down $1315 today, now price is $31400. 
Commodity fund is selling today.


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## traydor

China's Nickel Demand Will Erode Supply Through 2010, Inco Says 
March 29 (Bloomberg) -- China's demand for stainless steel will erode inventories of nickel faster than mines are able to boost supplies over the next five years, said an executive with Inco Ltd., the world's second-largest nickel producer. 

``The nickel market is facing ongoing shortages, strong demand and limited prospects for supply growth,'' Brent Rochon, Inco's assistant vice-president of marketing, said today at the Prudential Metals and Mining Conference in New York. 

The price of nickel, used mostly to harden stainless steel, has doubled in the past two years, reaching a 14-year high in January 2004. Nickel for delivery in three months fell $325, or 2.1 percent, to $15,425 a metric ton ($7 a pound) on the London Metal Exchange. 

Toronto-based Inco expects reduced supplies to limit the growth in demand for the metal to about 4.1 percent this year, Rochon said. Global supplies will rise by between 55,000 and 60,000 tons, including inventories and gains in mine output of between 40,000 and 45,000 tons, he said. 

``If China gets the nickel it needs for current growth plans, it could consume 45,000 tons, or 75 percent, of the extra nickel availability,'' Rochon said. 

China is poised to supplant Japan as the world's largest nickel consumer and should represent about 15 percent of the global market by the middle of this year, Rochon said. 

China's nickel consumption, which rose about 22 percent to approximately 160,000 tons last year, is expected to grow this year because inventories are low and demand ``continues to climb,'' Rochon said. 

Rising Demand 

``Last year ended with four months of growth,'' he said. ``Fourth-quarter demand was up 36 percent year-over-year and 2005 has started out even better, with the first two months more than doubling last year's levels.'' 

Global nickel inventories in warehouses monitored by the London Metal Exchange are down 33 percent from a year ago at 10,278 tons as of today. 

Inco expects to produce 490 million to 500 million pounds of nickel this year, below last year because of maintenance at facilities in Manitoba and Ontario and lower production at its PT Inco facility in Indonesia. 

``We expect the nickel market will be tight through the end of the decade,'' Rochon said. ``World supply will still not be enough to keep pace with even historic demand growth of 4 percent, and the impact of China makes a 4 percent demand growth projection seem very conservative.'' 

Inco's production costs this year will be about $2.15 a pound, Rochon said. 

Shares of Inco fell 37 cents to C$47.25 at 1:24 p.m. in Toronto Stock Exchange trading. The stock is up 6.2


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## Lucky_Country

Now I know why Twiggy is setting his sights on POS claiming the world needs 3 Ravensthorpes every year just to keep up with current demand.
The Ni price has not done mush over the last 12 months and its time for a run imo.


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## traydor

Lucky_Country said:


> Now I know why Twiggy is setting his sights on POS claiming the world needs 3 Ravensthorpes every year just to keep up with current demand.
> The Ni price has not done mush over the last 12 months and its time for a run imo.




well nickle has averaged 4% a year for the last 15 years so the next 15 will more than likley be more considering china and india are developing.....thats 40000 tons a year


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## So_Cynical

traydor said:


> well nickle has averaged 4% a year for the last 15 years so the next 15 will more than likley be more considering china and india are developing.....thats 40000 tons a year




Wouldn't u think that "bullishness" would be reflected in the SP,s of 
MCR and IGO...instead there getting hammered.


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## traydor

So_Cynical said:


> Wouldn't u think that "bullishness" would be reflected in the SP,s of
> MCR and IGO...instead there getting hammered.




hi i know what you mean its the same with heron i wish i knew why  are those companys you mentioned are they producing ? i think the market rewards up and running companys i,m not sure but look at what fortescue had done before they produced anything......thanks


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## nioka

traydor said:


> hi i know what you mean its the same with heron i wish i knew why  are those companys you mentioned are they producing ? i think the market rewards up and running companys i,m not sure but look at what fortescue had done before they produced anything......thanks




 There probably isn't a company more up and running in nickel than MCR. It is probably best described as galloping rather than running. With cash on hand, increasing production and a good dividend paying record what more could you ask for?. Except of course an increasing SP. Fundamentally the best nickel buy that I can think of. Anyone disagree.


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## 56gsa

nioka said:


> There probably isn't a company more up and running in nickel than MCR. It is probably best described as galloping rather than running. With cash on hand, increasing production and a good dividend paying record what more could you ask for?. Except of course an increasing SP. Fundamentally the best nickel buy that I can think of. Anyone disagree.




Nioka .. others to consider FXR, MRE, IGO, WSA, SMY  -WSA has been strongest of these last 6-12 months with good future potential

MRE is suffering at present because of the varanus fire and doubt over supply of gas 

Have nickel stocks peaked and on the way down?


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## 56gsa

this shows WSA and FXR have done better last 6 months than other nickel stocks- FXR has been a good performer last 2 months


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## nioka

56gsa said:


> Nioka .. others to consider FXR, MRE, IGO, WSA, SMY  -WSA has been strongest of these last 6-12 months with good future potential
> 
> MRE is suffering at present because of the varanus fire and doubt over supply of gas




 My suggestion is that the SP of MCR offers better value than the others. Take SMY, the share price is much higher than MCR and according to my examination of the fundamental values they are equal with MCR having the advantage of consistant dividend payments and a good cash balance. I suggest that SMY is fully valued and MCR is undervalued by comparison.


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## 56gsa

Noika - i presume you're bullish on nickel?

Just put together this comparison from comsec data...  to read it says MCR has a average rating of 2.0 from 5 brokers (1 = strong buy, 5 = sell), currrent share price of $3.10 and then the estimates for eps and div 

Based on this and looking and looking at forward PEs and div yield not much difference between SMY and MCR.  MRE way ahead on div yield but this reflects their current gas problems.  WSA way behind on PE but as for all of them the potential of additional resources not reflected in these stats


MCR	2/5			
 $3.10 	2007	2008	2009	2010
EPS	51.3	36.5	48.8	37.7
DPS	12	12	15.5	12.5
PE	 6.0 	 8.5 	 6.4 	 8.2 
div yield	3.9%	3.9%	5.0%	4.0%

MRE	2.9/7			
 $3.85 	2007	2008	2009	2010
EPS	58.3	53	59.9	35.9
DPS	40	31	37	23.6
PE	 6.6 	 7.3 	 6.4 	 10.7 
div yield	10.4%	8.1%	9.6%	6.1%

SMY	1.8/6			
 $4.62 	2007	2008	2009	2010
EPS	58.1	42.9	73.8	62.8
DPS	12	17	23	22
PE	 8.0 	 10.8 	 6.3 	 7.4 
div yield	2.6%	3.7%	5.0%	4.8%

WSA	2.4/6			
 $9.67 	2007	2008	2009	2010
EPS	-3.7	-9.4	34.7	46.7
DPS	0	0	16	18.3
PE	-261.4 	-102.9 	 27.9 	 20.7 
div yield	0.0%	0.0%	1.7%	1.9%

IGO	3.2/6			
 $5.40 	2007	2008	2009	2010
EPS	90.4	50.5	47.7	59
DPS	18	12.5	10	10.5
PE	 6.0 	 10.7 	 11.3 	 9.2 
div yield	3.3%	2.3%	1.9%	1.9%

FXR	none


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## nioka

56gsa,
 Yes I'm bullish on a lot of things, nickel included.

 My assessment of MCR is a little different to the figures quoted going forward. They have plans well under way to increase production beyond those shown by some analyists. The stats you show would not alone convince me to back MCR. I hope they are wrong going forward. I think they need updating.


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## Temjin

Remember that there is another way to invest in Nickel directly through etfsecurities.com on their ETFS offers. They also have one with a 100% leverage. 

The latest 30% power supply drop in WA is going to have some sort of implication on almost ALL metal prices.


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## renim

MCR being one of the Kambalda boys, won't have significant JORC reserves.  The nature of the 'dome' at Kambalda are lots of little nickel/gold deposits spread all over the area, with definite cut-off at depth (varies).  As the orebodies meanders down, its not really economically justifiable to drill out more than a couple of years worth of production.   
In short great historic production, but no surety of future production.  The locals don't mind, they know the ore is there, but for analysts valuing a resource company using JORC reserves, well its kills the stock.
Thats possibly one reason why WMC left, they stopped being capable of operating small mines, which is all Kambalda will ever contain.
(Histoical note, by yr 2000, Kambalda had drilled more core than all of NSW)

Why MRE is low, i don't know.

I would be interested to know how Voisey bay etc are dealing with chindia growth.

ie will there be over supply, or over demand

i'm thinking about moving out of nickel, but if twiggy is into it, well i wouldn't want to bet against that.


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## Mofra

Not all anaysis of Nickel is bullish:

http://www.abareconomics.com/interactive/08ac_june/htm/nickel.htm


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## michael_selway

Mofra said:


> Not all anaysis of Nickel is bullish:
> 
> http://www.abareconomics.com/interactive/08ac_june/htm/nickel.htm




Hm WSA still looks pretty good

*Earnings and Dividends Forecast (cents per share) 
2008 2009 2010 2011 
EPS -4.5 23.1 51.0 132.1 
DPS 0.0 9.0 26.4 52.5 *



> Date: 20/8/2008
> Author: Peter Wells
> Source: The Australian Financial Review --- Page: 25
> Some directors of Australian-listed companies were active in the sharemarket inmid-August 2008. Terry Streeter, the non-executive chairman of Western Areas,has acquired 875,000 shares in the mining company at a cost of $A6.59m.Likewise, ThinkSmart CEO Ned Montarello has paid $A1.64m for a parcel of sharesin the office equipment financing group. On the selling side, Just Groupchairman Ian Pollard has gained over $A240,000 after selling 109,452 of theretailer's shares to suitor Premier Investments
> 
> Western Areas on track for two new mines
> 12/09/2008 7:48:31 PM
> Nickel miner Western Areas NL says it is on track to start up two new mines near its Flying Fox mine in Western Australia next year.
> 
> Managing director Julian Hanna told the company's annual general meeting in Perth that these developments, the Spotted Quoll and Diggers South mines, between Kalgoorlie and Esperance, would be underpinned by a recovered nickel price.
> 
> Mr Hanna said the nickel price, which was now about $US8.50 per pound (lb), would return to its usual level of between $US10 and $US15/lb soon due to its role in the production of stainless steel, which remained in high demand.
> 
> "We don't believe that it will remain below $US10 per pound for too long," Mr Hanna said.
> 
> "At $US8 per pound it is starting to knock out some of the producers around the globe ... but about $US15 per pound, it starts to be substituted in stainless steel with chromium, manganese and that sort of thing."
> 
> Western Areas aims to be the second largest producer of nickel in Australia, behind BHP Billiton Ltd, by 2011, producing 35,000 tonnes of nickel per annum from five mines.
> 
> The company reported a loss for 2007/08 of $54.9 million.















thx

MS


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## pixel

I didn't want to create a new thread, so I ran a Search for "nickel". This one will do.

I have been checking a few materials at the London Metals Exchange. While copper follows PMs down, the trend for nickel is looking more Bullish. At least from a Technical pov, there could be an inverted H&S pattern in the making.




One might also consider the Cup & Handle option, although that is generally considered a continuation pattern when it should sit at the top of an uptrend of sorts. See http://www.leavittbrothers.com/education/chart_patterns/cup_and_handle_bullish.cfm


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## peter2

Nickel has been slowly going higher over the last year and has had a good May18. 
I've posted a few kitco charts so you can agree with me. 


_Aust nickel miners_: should be going higher as well, 
*IGO WSA* have kicked up this week
*PAN, MCR* are at/near new highs. 

I've read reports (from nickel miners of course) that there might be a shortage in the next 12 months.


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## Joules MM1

peter2 said:


> ....you can agree with me.




of course ! :

Electric cars use lithium-ion batteries, which contain high-grade nickel sulfate, to help keep a charge over longer distances. Lithium-ion batteries are in electric models from Tesla's high-end Model X to General Motors Co.'s  (GM - _Get Report_) Chevrolet Bolt and Nissan Motors'  (NSANF) Leaf.


But lithium-ion batteries exclusively use high-grade nickel, which is only about half of the world's supply of the metal. Among the biggest high-grade nickel producers in the high-grade market already facing supply constraints? Norilsk Nickel.


The problems could get worse from there, too. According to Glencore PLC  (GLNCY) , there are about 40 kilograms of nickel in the average electric car battery pack. To keep up with booming demand for electric vehicles, nickel supply will have to grow 55% by 2030.


According to North America Nickel, electric car lithium-ion batteries of the future will rely even more on nickel than those today do. The typical battery makeup is expected to grow to nearly 80% nickel in 2020 from about 33.3% in 2017.


"Many of the factors that impact our manufacturing costs are beyond our control, such as potential increases in the costs of our materials and components, such as lithium, nickel, and other components of our battery cells or aluminum used to produce body panels," Tesla wrote in its most recent annual report. "If we are unable to continue to control and reduce our manufacturing costs,
https://www.thestreet.com/markets/c...ws-for-electric-carmakers-like-tesla-14561352

Wood Mackenzie estimates that nickel demand from the electric vehicle sector is going to grow from 40,000 tonnes in 2016 to 220,000 tonnes in 2025.
https://www.reuters.com/article/nic...electric-vehicle-buzz-andy-home-idUSL8N1N06DP


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## So_Cynical

Dam - i meant to watch MCR for the comeback, double bottom of around 14c gone.


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## Wysiwyg

NCM 811 = 8 parts Nickel, 1 part Cobalt, 1 part Manganese


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## greggles

Nickel at 6 month highs as a result of robust Chinese demand and expectations of a fourth consecutive year of supply deficit.

https://www.news.com.au/finance/bus...e/news-story/654c7b11e7f23470e243e7db5ec48081


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## Ann

*Nickel stocks on the ASX: The Ultimate Guide*


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## sptrawler

Ann said:


> *Nickel stocks on the ASX: The Ultimate Guide*



The report is obviously a little old, panoramic sold off its Kambalda operations and are in the process of starting up the Savannah operation, it has hit a couple of hurdles.

https://thewest.com.au/business/min...h-on-troubled-savannah-ramp-up-ng-b881126948z

But generally, the report was very good, thanks for the post Ann.


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## Padowan

Reports out of Indonesia last night alluded to a nickel ore export ban brought forward by two years to December 2019, which caused a nickel price rally on the LME of +10%.

If the media reports are true I think if the forum monthly stock tipping competition was going for a few more days sptrawlers pick would have a even better chance of winning


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## rederob

Where came from, and where we are today:


2014's price peak looks like falling decisively as the past year's trend follows through.


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## Ann

After Elon Musk called for more nickel to be mined back in September...








						Miners answer Musk call for more nickel
					

"Please mine more nickel," these four words from Tesla CEO Elon Musk reverberated across the global mining sector and raised awareness of how fundamental nickel is to the lithium-ion batteries powering hundreds of millions of electric vehicles to come off Tesla and traditional automaker assembly...



					www.miningnewsnorth.com
				




The price has been doing well but with all the miners old and new out there with their spades and buckets digging away there may be a slight oversupply one may wonder?

I had a look at the forecast for nickel and it is suggesting there will be a falling away of the price.

"Nickel is expected to trade at 19696.98 USD/MT by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 18341.49 in 12 months time."


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## sptrawler

The big problem the users of nickel have is, unless the price remains reasonable, the mines will go back on care and maintenance.
Nickel sulphate is a very high cost product to mine, it is found in hard rock areas and the yield per ton of ore is quite low. So as happened around 2013 a lot of the mines and processing plant is shut down and it isn't restarted unless there is strong possibility of the price holding up.
The demand for nickel isn't just increasing due to the onset of EVs IMO, it is also influenced by the use of stainless steel,


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## Sean K

Ann said:


> After Elon Musk called for more nickel to be mined back in September...
> 
> 
> 
> 
> 
> 
> 
> 
> Miners answer Musk call for more nickel
> 
> 
> "Please mine more nickel," these four words from Tesla CEO Elon Musk reverberated across the global mining sector and raised awareness of how fundamental nickel is to the lithium-ion batteries powering hundreds of millions of electric vehicles to come off Tesla and traditional automaker assembly...
> 
> 
> 
> www.miningnewsnorth.com
> 
> 
> 
> 
> 
> The price has been doing well but with all the miners old and new out there with their spades and buckets digging away there may be a slight oversupply one may wonder?
> 
> I had a look at the forecast for nickel and it is suggesting there will be a falling away of the price.
> 
> "Nickel is expected to trade at 19696.98 USD/MT by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 18341.49 in 12 months time."




Hopefully it stays over $7.50/lb what CTM used for their Scoping Study. Currently aiming to produce 341K tns over 13 years = $$$. And growing.


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## sptrawler

Sean K said:


> Hopefully it stays over $7.50/lb what CTM used for their Scoping Study. Currently aiming to produce 341K tns over 13 years = $$$. And growing.



If it stays around $US10/lb most Australian miners are very profitable, once it gets below $5/lb it is time to switch the lights off for most.
Well from memory those were the figures when I was working.


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## mullokintyre

I wan't sure whether to put this Nickel thread , the China thread, or the world is coming to an end thread.
But here it is.
From Zero Hedge


> Around the time Peabody was served with a $534 million margin call on its hedging coal futures short, which it funded with a new $150MM unsecured (10%) revolver from Goldman Sachs, one of China's largest banks was also served with a margin call for hundreds of millions of dollars on a nickel short gone terribly bad after the price of Nickel did... well this:
> 
> 
> However, unlike Peabody, a unit of China Construction Bank Corp - one of China's "Big Four" banks - was given additional time by the London Metal Exchange to *pay hundreds of millions of dollars of margin calls *it missed Monday amid an unprecedented spike in nickel prices. The reprieve from the LME - _which just last week sent out thousands of erroneous margin calls on metals contracts - _means that the unit, called CCBI Global Markets, is not formally in default, Bloomberg reported citing sources.
> 
> The details of the non-payments aren't quite clear: Bloomberg notes that the deferred default "isn’t necessarily an indicator of any problems at the parent company" although Bloomberg may be merely trying not to antagonize a major client. Instead, the media conglomerate suggests that the non-payment is more likely due to a failure by one of its metals-industry clients to make margin payments to CCBI Global Markets, which is a broker on the LME’s open-outcry trading floor. That in turn, left CCBI Global Markets struggling to arrange payment of the unusually large margin calls after the end of the business day in Asia, as nickel prices exploded throughout Monday.
> 
> As reported earlier, Monday’s monster squeeze was driven by market participants with short positions being forced to close out as they couldn’t meet margin calls.
> But while a big Chinese bank may have had immunity, others may not be so lucky: Bloomberg previously reported that Chinese entrepreneur Xiang Guangda - known as “Big Shot” - had a large short position on the LME through his company, Tsingshan Holding Group, the world’s largest nickel and stainless steel producer. It's unclear whether that particular trader received a margin call and if he paid it.
> And so, as we wait for more massively short squeezed names to emerge, we can't help but wonder if this is precisely the start of the "liquidity crisis" predicted by Zoltan Pozsar; after all, he has called virtually everything else spot on so far...



Nothing I like better is to short squeeze on the parasitic shorters.
Got my popcorn, a  fine selection of reds, and a comfy chair.
Mick


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## mullokintyre

Further to the  "default" on Nickel exposure, comes an interesting conspiracy theory about the LME.
From Zero Hedge


> Like many commodities, nickel price has surged from the Covid lows. However this week is has spiked, effectively doubling, and briefly reached highs earlier this week of USD 100,000.
> In response to this move, the LME has closed the market for nickel, and cancelled trades.
> 
> Why have they done this? *Essentially this was to give time (and by cancelling trades, reduce the amount) for a major (Chinese) member to make a margin call. *But in reality this was default by a member, and LME choosing not to place that member in default.
> 
> If we look at the default by Einer Aas in 2018, we can see why this is a default in all but name. When Einer Aas could not make a marign call he was bankrupted. His default waterfall is shown below. His initial margin was taken, then his default fund contribution. Value unknown, but I would estimate around €30MM. The clearinghouse then chipped in €7MM, and then there as a €107MM from the commodity service default fund. This commodity service default fund is paid by “surviving” members of clearinghouse. As every clearinghouse trade is matched, typically “surviving” members are the winners, or traders that have been on the right side of the trade.
> 
> The loss on the LME Nickel trade has been estimated at up to USD 12bn. The LME default fund (4.2 on its IOSCO CPMI disclosure) is given at USD 1bn. I don’t know if that number is entirely accurate, of if all of it can be applied to the nickel market, or is segregated by product. Clearly, there was a counterparty who could not make margin call, and if the rules had been followed, they should have been declared bankrupt, and the position sold, and any losses would be paid by LME, and then surviving members.
> 
> However, LME has cancelled trades, to reduce the price from USD 100,000 to USD 50,000, closed the market until Friday, and will limit price movements to 10% a day.
> 
> What does this mean? We know that one major counterparty should have gone bust, and is now getting a stealth bailout from the clearinghouse. Rather than asking surviving members to recapitalize, it has artificially adjusted prices to reduce their winnings. All of this has been done without consulting all members, and to the benefit of as far as we know one well connected member. As mentioned before, in 2019 large clearinghouse members recommended reforming the default waterfall.



So why would the LME  not bankrupt the Chinese , and in the process  push the losses onto the other LME members?
Perhaps it can be found in the statement from another  Zero Hedge Story




> Needless to say, the fact that the LME is now owned by Hong Kong Exchanges and Clearing, whose biggest shareholder is the Hong Kong government which for the past two years has been a puppet of China, did not hurt Xiang, whose empire would have been bankrupted had the LME forced him to make payment on his margin call. None other than outgoing LME chief executive Matt Chamberlain admitted as much.
> 
> Long story short: if you are a small nobody and your margin call will wipe out just you, nobody will think twice to margin you out; on the other hand if you are a Chinese tycoon whose default will ruin not just him but lead to massive losses for all LME members and also drag down more than one broker in the process (as Russell Clark explained earlier), well then... the rules can certainly be bent.
> 
> And sure enough, on Wednesday morning, two days after Xiang was _supposed _to be in default buried by billions in margin calls, Bloomberg reports that he has successfully secured "a package of loans from local and international banks to help it meet a wave of margin calls."
> 
> According to the report, Tsingshan Holding has won credit promises from - drumroll - none other than _*JPMorgan Chase,*_ and one of China's largest banks, China Construction Bank, *in meetings that ran into the pre-dawn hours of Wednesday morning*. Some of the terms, such as how much extra collateral Tsingshan needs to pledge, are still under discussion, Bloomberg's sources said.
> 
> Since JPMorgan's assistance alone was not enough, Chinese authorities also directed Tsingshan’s domestic banks to offer more credit lines to the company, with the bulk of the new capital going toward satisfying the margin calls on its existing positions on the London Metal Exchange.







so we find that once again, the Chinese look after their own and screw everyone else.
It also highlights how JP Morgan will let nothing get in the way of them making a buck or two.
Mick


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## mullokintyre

mullokintyre said:


> Further to the  "default" on Nickel exposure, comes an interesting conspiracy theory about the LME.
> From Zero Hedge
> 
> So why would the LME  not bankrupt the Chinese , and in the process  push the losses onto the other LME members?
> Perhaps it can be found in the statement from another  Zero Hedge Story
> 
> 
> 
> 
> 
> 
> 
> so we find that once again, the Chinese look after their own and screw everyone else.
> It also highlights how JP Morgan will let nothing get in the way of them making a buck or two.
> Mick



As a further result of the LME action, some players are saying they will not trade on the exchange if the LME is going to favour one party over another.
From The Australian


> The LME has said it would open the market cautiously with a shortened trading day and limits on moves in nickel prices in either direction. It has asked companies with big long positions and big short positions in the metal to pair off those positions, reducing the risk of a further short squeeze. It could resort to forcing the companies to net out their positions, said the person familiar with the exchange.
> 
> Investors on the exchange were furious about the contract cancellations, which they say give an advantage to Tsingshan, its lenders and the LME. One hedge-fund manager said he had cut his positions on the LME by 90 per cent because he couldn’t put clients’ money on the line and risk the trades being cancelled.
> 
> A point of contention among some bruised traders: The LME is owned by Hong Kong Exchanges and Clearing, and its actions helped buy a major Chinese company and its state-owned lenders time to stem losses.
> 
> Mr Chamberlain said the nationality of the company played no part in the LME’s response to the seizing up of the nickel market. “I can unambiguously say that the nationality of the participant was not a relevant factor here,” he said.



Mick


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## waterbottle

@mullokintyre great posts!

The LME is not the only exchange that interrupts the 'free market' during periods of high volatility


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## Tyre Kicker

Ann said:


> After Elon Musk called for more nickel to be mined back in September...
> 
> 
> 
> 
> 
> 
> 
> 
> Miners answer Musk call for more nickel
> 
> 
> "Please mine more nickel," these four words from Tesla CEO Elon Musk reverberated across the global mining sector and raised awareness of how fundamental nickel is to the lithium-ion batteries powering hundreds of millions of electric vehicles to come off Tesla and traditional automaker assembly...
> 
> 
> 
> www.miningnewsnorth.com
> 
> 
> 
> 
> 
> The price has been doing well but with all the miners old and new out there with their spades and buckets digging away there may be a slight oversupply one may wonder?
> 
> I had a look at the forecast for nickel and it is suggesting there will be a falling away of the price.
> 
> "Nickel is expected to trade at 19696.98 USD/MT by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 18341.49 in 12 months time."
> 
> View attachment 133840




The ‘ol forecast you looked at was only slightly off Ann.


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## Ann

Tyre Kicker said:


> The ‘ol forecast you looked at was only slightly off Ann.




I reckon all bets are off as far as price projections for a shipload of products now there is the Russian invasion of Ukraine and the world telling Russia where they can shove their stuff.


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## Tropico

mullokintyre said:


> So why would the LME  not bankrupt the Chinese , and in the process  push the losses onto the other LME members?
> Perhaps it can be found in the statement from another  Zero Hedge Story



My understanding is that if there is a default, then *LME Clear* is responsible to cover any losses of the countering parties. *LME Clear* would more than likely go into administration itself if this happened.
Desperate measures for desperate times.
The big winner, Glencore?


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## sptrawler

The thing is from a small investors perspective, it has put nickel in the hsadlights, many investors would not have given nickel a second thought now they know it is worth serious money.


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## frugal.rock

Must be about time for nickel price to start kicking off again. Not alot in the chart to advocate this though.

Surprised it has been so subdued of late.
I guess it's because you can't eat it or burn it as fuel...

Weekly




Daily


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## peter2

From Kitco.com. A bit of evidence that the PON might bounce soon.  LME stores of nickel have been declining for the past year.


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## mullokintyre

Nyrstar has shut down about 2% of the worlds Nickel refining capacity due to soaring energy costs.
That will probably help the price.
Mick


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## InsvestoBoy

peter2 said:


> From Kitco.com. A bit of evidence that the PON might bounce soon.  LME stores of nickel have been declining for the past year.
> 
> View attachment 145897




Not that I'm prognosticating about Nickel supply either way, but market participants are withdrawing stocks of lots of metals, e.g. copper from LME because of the zinc fiasco...so I wouldn't necessarily put too much weight behind those charts as being able to infer the drawdown of aggregate supplies.


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