Nickel - the metal for 2007?

[surfingman]

Can anyone give me a approximate estimate of what grade nickel is economical to mine in Australia, Is 1.40% Ni economical? with a resource of around 8 MT...

 

[rederob]

Can anyone give me a approximate estimate of what grade nickel is economical to mine in Australia, Is 1.40% Ni economical? with a resource of around 8 MT...

Nickel is economic when the cost of selling is greater than the cost of producing.
There is no other equation worth losing sleep over.

 

[Col Lector]

Word is that Toyota has postponed its intended move to lithium-ion batteries (from Ni-hydride) for 2008 Prius due to safety concerns. This has implications for other models & hybrid car manufacturers and hence for future demand for nickel in this form. Currently supplied by Canadian co's as I recall. Report in The Wall Street Journal

 

[samfisher18]

Nickel Drops in London on Demand Speculation; Copper, Zinc Fall

By Chanyaporn Chanjaroen and Brett Foley

June 19 (Bloomberg) -- Nickel declined in London for a second consecutive day on speculation stainless-steel makers will continue to cut usage after an earlier price rally. Copper and zinc also fell.

Nickel's 19 percent gain this year has made the market ``overheated,'' analysts including Tobias Merath at Credit Suisse Group in Zurich said. Such increases have reduced usage among stainless-steel producers, which account for two-thirds of consumption worldwide, Merath said today in a phone interview.

``Prices will fall to around $36,000, $37,000 in the next three months,'' Merath said. ``Nickel has been overheated since the beginning of this year.''

Nickel for delivery in three months on the London Metal Exchange dropped $1,175, or 2.9 percent, to $39,225 a ton as of 12:55 p.m. local time. The contract fell 4.3 percent yesterday, the largest drop in four days. It traded at $38,900 on June 14, the lowest since Feb. 22.

A drop in usage at companies including Outokumpu Oyj, the world's third-largest alloy producer, has helped push down the price 20 percent from a record $51,800 a ton on May 9. The metal will move into a ``significant'' surplus next year, after supply is expected to meet demand this year, Goldman Sachs JBWere Pty, the Australian affiliate of the world's biggest securities firm, said June 14.

Reduced consumption created a 40 percent increase in stockpiles this year. Inventories monitored by the LME dropped 12 tons to 9,276 tons, the exchange said today in a daily report.

Aluminum Tax Incentives

Copper fell $110, or 1.5 percent, to $7,430 a ton, snapping three days of gains. Last week, the contract rose 5 percent amid strike threats at mines in South America, including one at Codelco, the world's largest copper producer.

Codelco's contract workers pushed pack the start date of a planned strike by at least one day to June 21, Cristian Cuevas, president of the Confederation of Copper Workers, said yesterday. This was the second time the group delayed a walkout this month.

Aluminum gained $8, or 0.3 percent, to $2,713 a ton. China, the world's biggest producer, will remove tax incentives on exports of the metal used to make cars, planes and beverage cans to help rein in a record trade surplus. The government will remove the tax rebate on shipments of aluminum rods and bars from July 1, the Ministry of Finance said today. The rebate on aluminum products is now 8 percent to 11 percent.

``This is a very positive sign for aluminum as it shows that the government is serious about curbing production and exports,'' Robin Bhar, a London-based analyst at UBS AG, said today in a report. Exports of aluminum products almost doubled in the first five months of this year from a year ago, according to customs data.

Zinc fell $60, or 1.6 percent, to $3,625 a ton, taking this year's drop to 14 percent, the most of any of the six metals traded on the LME. Production of the metal used to galvanize steel rose 10 percent in the first four months of 2007, beating usage by 53,000 metric tons, the International Lead and Zinc Study Group said today.

Lead gained $5, or 0.2 percent, to $2,395 a ton. Demand for the metal used in batteries beat supply by 4,000 tons over in the first four months of this year as output grew 1 percent, the ILZSG said. Lead traded at a record $2,430 yesterday.

Tin was unchanged at $14,200.

This is a bit concerning as a hold AGM, i believe LME changing the rules, just brought the inevitable upon us a lot quicker than expected, compounded effects have lead to this sharp decline

 

[BREND]

Hedge funds selling nickel tonight.

 

[joeljp]

Hi Brend,

PON is now back to around Jan 07 level. Do you see any end in sight of this sell off soon?

Thanks in advance, joeljp

 

[BREND]

Hi Brend,

PON is now back to around Jan 07 level. Do you see any end in sight of this sell off soon?

Thanks in advance, joeljp

Nope, its not over yet. I can't afford to short even 1 lot of nickel futures, so to tap on falling nickel price, I have invested in companies that have previously been hurt by high nickel price.

The best commodity to invest in now is cotton. You can take a look at my blog for more information on cotton: http://basemetal-trading.blogspot.com/

 

[joeljp]

Thanks Brend! What time frame are you looking at for cotton? 6-12 mths or purely a short term play?

Cheersm joeljp

 

[rederob]

Although nickel is not in "freefall", it has lost a lot of its sheen and is set for further declines in the near term.
Consumers have read the winds of change and are presently letting inventory build, and prices fall further.
Stainless steel demand has waned in recent months, and this weakness will affect nickel markedly.
However, there is a cyclical trend to production and it will not take much in the present tight market to turnaround prices quickly.
I personally expect nickel prices to wilt more - to below $30k - before a rebound.
I remain cautious about nickel getting back to $50k again as ferronickel seems an economic alternative (for Chin) that probably will cap upside for the time being.
In any event, nickel at $30k is a nice margin for fixed cost producers that have C1 costs around $5/lb.

 

[joeljp]

PON is getting hammered again, even as I type. All the usual suspects SMY, MCR, JBM, IGO all took a hit today, some more than others. Sub $30k is a definite possibility the way it's going. We now need the AUD is weaken substantially to offset that loss and I can't see that happening any time soon. So in the mean time, we better brace ourselves and have some cash ready to pounce when PON does turn around.

 

[BREND]

Thanks Brend! What time frame are you looking at for cotton? 6-12 mths or purely a short term play?

Cheersm joeljp

According to UBS, cotton is one of the best commodity for the next few years, depends if you believe in that.

As for myself, I bought cotton futures, already made more than 100% (due to leverage effect), so I'm not really concern about long term.

You can find more information about cotton here:
http://basemetal-trading.blogspot.com/2007/07/sugar-grains-cotton-may-be-best.html

http://basemetal-trading.blogspot.com/2007/07/cotton-rises-for-4th-session-on-china.html

 

[explod]

Frank Venerosa in a paper dated April 17,2007 to Global Central Bankers at the World Bank is very bearish on metals due to huge hoarding by Hedge Funds with suggestions of manipulation. Seems to make a case that it is going to all tumble down in spite of Chinese demand.

Nickel in particular is singled out. It is a 50 page pdf so too big to load here, but can be found on Kitco Base Metals site.

 

[joeljp]

Nope, its not over yet. I can't afford to short even 1 lot of nickel futures, so to tap on falling nickel price, I have invested in companies that have previously been hurt by high nickel price.[/url]

hi Brend, two consective up days for Nickel when stockpile continues to grow. I'm confused! Are the hedge funds back in again? I'm just wondering if we will ever see the $20/lb mark again!

 

[BREND]

hi Brend, two consective up days for Nickel when stockpile continues to grow. I'm confused! Are the hedge funds back in again? I'm just wondering if we will ever see the $20/lb mark again!

Nickel is back up again.

 

[rederob]

Nickel is back up again.

Yes
But for how long?
I still see further price weakness - possibly to $25K, but very likely to dip below $30k while inventory builds continue.
I would caution against betting too much on a bounce at this stage as the price trend remains to the downside - a trend that is holding firm.

 

[BREND]

Yes
But for how long?
I still see further price weakness - possibly to $25K, but very likely to dip below $30k while inventory builds continue.
I would caution against betting too much on a bounce at this stage as the price trend remains to the downside - a trend that is holding firm.

Noted, thanks

 

[Damuzzdu]

Re: Nickel - the metal for 2007? Not Now!!!

Yes
But for how long?
I still see further price weakness - possibly to $25K, but very likely to dip below $30k while inventory builds continue.
I would caution against betting too much on a bounce at this stage as the price trend remains to the downside - a trend that is holding firm.

Rederob,

Well, the $30,000 is now here!!!

Nickel fell US$925.00/tonne to close at $US29850/tonne, below the key $30K level on LME Thursday. Not help prices was another rise of Nickel stocks into LME warehouses. Nickel stocks increased 2.75% to 14808 Mt from 14412 Mt yesterday, an inflow of 396 Mt.

Nickel better bounce from here or the $30K level will quickly turned into resistance as Nickel will trade much lower.

This will not be good news for Nickel stocks...JBM, MCR, SMY, IGO, AGM, MCR, MRE today on our market, as these will under more selling pressure one might suspect.

Cheers
Muzz

 

[rederob]

Re: Nickel - the metal for 2007? Not Now!!!

Nickel better bounce from here or the $30K level will quickly turned into resistance as Nickel will trade much lower.
Muzz

Lots of dead cats out there.
Look for $20k as support.
I will peg medium term resistance at $25k.
The real bounce is likely in the 4th quarter.
This quarter may see some late consolidation, but I don't think there can be a meaningful bounce for several months.
Overall (ie looking into 2008) I see a more settled market with little chance of $40k being breached unless pig nickel is unable to maintain its "substitute" status.

 

[michael_selway]

Re: Nickel - the metal for 2007? Not Now!!!

Lots of dead cats out there.
Look for $20k as support.
I will peg medium term resistance at $25k.
The real bounce is likely in the 4th quarter.
This quarter may see some late consolidation, but I don't think there can be a meaningful bounce for several months.
Overall (ie looking into 2008) I see a more settled market with little chance of $40k being breached unless pig nickel is unable to maintain its "substitute" status.

Hey red, what do u think of MRE now? Might be a buy soon? its got great yeild for at least 1 year ill say, plus maybe a nickel price rebound like lead?

thx

MS

 

[rederob]

Re: Nickel - the metal for 2007? Not Now!!!

Hey red, what do u think of MRE now? Might be a buy soon? its got great yeild for at least 1 year ill say, plus maybe a nickel price rebound like lead?

thx

MS

I like MRE for yield.
But I still think it will be a while before nickel prices rebound.
So cheaper days are ahead on the fundamentals.
Today nickel equities will bounce again - probably more dead cats being tossed out!