Nickel - the metal for 2007?

[michael_selway]

MS
Your example shows a clear trend - 2.4% percentage point change in 3 days is not "negligible".
Another way of doing the maths on your scenario suggests that the variation was almost 25% in those 3 days, viz 2.4/9.6 - so isn't that an interesting take!
You can chart the rate of change, and with even "negligible" variations it may be possible to notice a "steady" trend, rather than a robust one.
If you are a daily follower of the fundamentals, these trends are often quite obvious.
On the nickel front, it is blatantly obvious that the fundamentals are tightening more rapidly by the day, with an overnight cancellation accounting for over 6% of total warranted stock - bringing the cumulative share of cancelled to total stocks to 20%.
The problem we have with the maths as the denominator gets smaller, is that the statistics tend to become meaningless and should be ignored to a large degree: Concentrate on the raw numbers and trends.

The thing about Nickel is that LME supplies were much lower not that long ago, Aug 05

 

[rederob]

MS
You need to look at the full picture.
Cancellation rates have been increasing as inventory stocks have been decreasing, and nickel prices have been increasing (monthly basis) while nickel equity prices decreasing.
Add to this equation the recent increase in LME and Comex "margins", which should have reduced price volatility, but did little in fact!
My view is we are very close to a major sharp price upswing in nickel equities, which only needs to be supported by nickel price consolidation (via reduced speculation).
The stainless steel market is showing no weakness, and this sector probably accounts for over half the nickel sent to markets.
Those that think the commodity markets are destined to fall more may be right, but it will be due only to large-scale funds exiting the market and not to any fundamental weakness.
Be prepared for a significant rebound in the second half.

 

[michael_selway]

MS
You need to look at the full picture.
Cancellation rates have been increasing as inventory stocks have been decreasing, and nickel prices have been increasing (monthly basis) while nickel equity prices decreasing.
Add to this equation the recent increase in LME and Comex "margins", which should have reduced price volatility, but did little in fact!
My view is we are very close to a major sharp price upswing in nickel equities, which only needs to be supported by nickel price consolidation (via reduced speculation).
The stainless steel market is showing no weakness, and this sector probably accounts for over half the nickel sent to markets.
Those that think the commodity markets are destined to fall more may be right, but it will be due only to large-scale funds exiting the market and not to any fundamental weakness.
Be prepared for a significant rebound in the second half.

Yeah ic

The real price of nickel
Source: Canadian Mining Journal

Nickel CatalogCommunications consultant and CMJ contributor Stan Sudol sent us his observations on the nickel price and how far short of a record the current value is.

"Contrary to what you may have been reading in the global media (as of May 28, 2006) nickel has not reached its historical high. That occurred in late March, 1988 when the price skyrocketed to a record-setting US$10.84/lb, a level yet to be reached during this current commodity boom. With inflation factored in, that peak would be worth US$16.78/lb.

"The record spike in price was the result of a 'perfect storm' of politics, strikes, technical problems and industry under capacity. … The straw that finally broke the camel's back was a dispute between Falconbridge and the Dominican Republic over an export tax on ferronickel shipments. … The peak price of US$10.84 didn't last long but it did establish a benchmark that has yet to be broken.

"Current global worries about Sudbury's labour negotiations [a tentative deal was reached on May 29], spring floods that are holding up Russian nickel exports and a recent transformer fire at PT Inco's Sorowako, Indonesia, operations in one of its four electric furnaces will put additional upward pressures on the current price."

http://metalsplace.com/metalsnews/?a=5379

 

[Kipp]

Yeah ic



http://metalsplace.com/metalsnews/?a=5379

Tis a shame that stike was averted.... I was sending all the emails and letters of support I could for the miners to keep the strike up.. but those bastards crumbled!!!

Meh... guess I'll just have to hope some of those hybrid cars take off- just wait till oil clips $100 a barrel!!!!

 

[michael_selway]

JBM, MCR, IGO, SHN, MRE, NKL?

however all of them appear to have specific risk, that is, mine problems or short mine life?

thx

MS

**** forgot SMY



thx

 

[markrmau]

Russia: Nickel may be added to strategic deposits list - ministry-1

http://en.rian.ru/russia/20060605/49057532.html

Means they may limit % of reserves foreign comanies are allowed to own. Doesn't mean they will stockpile Ni.

 

[rederob]

MI nickel stocks analysis: Cancelled tonnage accumulates
Metals Insider - 05 June 2006
Last week brought 3,660t of fresh cancellations, including another batch of 1,290t on Friday itself, which marked an acceleration from an already robust rate. The ratio of cancelled to total registered tonnage in the system ended the week at 28.75%, which is the highest level seen since Jun 1 last year.
That promises an extension of the already strong daily draw rates that have underpinned the current downtrend. Last week’s net decline of 1,206t was the 12th consecutive weekly fall with the geographical spread of active locations in Friday’s report attesting to the general strong demand for LME-registered tonnage right now.

Nickel's rate of drawdown will be sending alarm bells through the metals market: There is no doubt that it is the "metal for the moment" rather than for the year.

 

[michael_selway]

MI nickel stocks analysis: Cancelled tonnage accumulates
Metals Insider - 05 June 2006
Last week brought 3,660t of fresh cancellations, including another batch of 1,290t on Friday itself, which marked an acceleration from an already robust rate. The ratio of cancelled to total registered tonnage in the system ended the week at 28.75%, which is the highest level seen since Jun 1 last year.
That promises an extension of the already strong daily draw rates that have underpinned the current downtrend. Last week’s net decline of 1,206t was the 12th consecutive weekly fall with the geographical spread of active locations in Friday’s report attesting to the general strong demand for LME-registered tonnage right now.

Nickel's rate of drawdown will be sending alarm bells through the metals market: There is no doubt that it is the "metal for the moment" rather than for the year.

Yeah it might be temporary only, thats the danger of drawing conclusions too early

Again the danger lies in the "in", ie additions to Live Warrants

Some were added from singapore recently

thx

MS

 

[michael_selway]

MI nickel stocks analysis: Cancelled tonnage accumulates
Metals Insider - 05 June 2006
Last week brought 3,660t of fresh cancellations, including another batch of 1,290t on Friday itself, which marked an acceleration from an already robust rate. The ratio of cancelled to total registered tonnage in the system ended the week at 28.75%, which is the highest level seen since Jun 1 last year.
That promises an extension of the already strong daily draw rates that have underpinned the current downtrend. Last week’s net decline of 1,206t was the 12th consecutive weekly fall with the geographical spread of active locations in Friday’s report attesting to the general strong demand for LME-registered tonnage right now.

Nickel's rate of drawdown will be sending alarm bells through the metals market: There is no doubt that it is the "metal for the moment" rather than for the year.

Hi, both Copper and Nickel had alot "in" or added to Live warrants today

Does thsi suggest anything?

thx

MS

 

[rederob]

Hi, both Copper and Nickel had alot "in" or added to Live warrants today
Does thsi suggest anything?

Yes
It suggests that drawdowns were not matching inflows!
Nickel still has about 30% of warranted metal ready to leave warehouses, so we need to see if inflows counter the drawdowns in coming weeks.
Hard to tell, but cancellations have continued to be robust, suggesting a heck of a lot more will need to come into LME before nickel capitulates.
Copper is not as tight, but a similar pattern to emerge. Importantly about copper, most metal is in Asia. It means that when the fundamentals perk up and prices roll upwards, a similar parabolic effect is likely later in the year.
Nickel has not gone parabolic this year yet is still trading comparatively higher than it should given the carnage suffered by copper and its cobbers.

 

[michael_selway]

Yes
It suggests that drawdowns were not matching inflows!
Nickel still has about 30% of warranted metal ready to leave warehouses, so we need to see if inflows counter the drawdowns in coming weeks.
Hard to tell, but cancellations have continued to be robust, suggesting a heck of a lot more will need to come into LME before nickel capitulates.
Copper is not as tight, but a similar pattern to emerge. Importantly about copper, most metal is in Asia. It means that when the fundamentals perk up and prices roll upwards, a similar parabolic effect is likely later in the year.
Nickel has not gone parabolic this year yet is still trading comparatively higher than it should given the carnage suffered by copper and its cobbers.

Hi ok

But does continuous large "in"s which add to live warrants mean anything?

Eg copper, nickel, aluminium yesterday

Thanks

MS

 

[rederob]

MS
Fundamentals mean looking at the whole supply and demand equation, so daily numbers are not going to paint the picture you need to be looking at.
With nickel you will see warrantings at very few locations, and draws from many: The pace of withdrawls is greater than resupply for now on a weekly trend basis.
With copper there is a similar pattern in that resupply is largely confined to Asian exchanges, yet demand is across the board. Copper supplies in the US are tighter still with less than 10000 tonnes available, although draw rates are comparatively slow.
SHFE copper remains tight, although the China Reserves Bureau is selling old copper into the market, which has had the effect of increasing SHFE exchange stock levels. I think the Chinese need to restock on copper, so I expect they will stop selling as soon as prices come down to their buy range.
As a quick aside on copper, thin market conditions are contributing to extreme volatility, and this will continue until producers see value in forward selling into price stability rather than occasional offerings into spot.
Which brings me back to nickel: Norilsk Nickel have indicated they may withdraw from the spot market from July, which would leave the LME data in a bit of precarious situation as most inflows seem to be able to be tracked to them! We could be looking at consumers knocking directly on the door of Norilsk rather than head to their nearest LME warehouse: And that would truly set the cat amongst the pigeons.

 

[markrmau]

Which brings me back to nickel: Norilsk Nickel have indicated they may withdraw from the spot market from July, which would leave the LME data in a bit of precarious situation as most inflows seem to be able to be tracked to them!

is that the reason for nickel carnage on lme for last 2 days?

Could be putting in a wave 4 LOL.

 

[michael_selway]

is that the reason for nickel carnage on lme for last 2 days?

Could be putting in a wave 4 LOL.

is "wave 4" bullish or bearish?

thanks

MS

 

[markrmau]

Bearish. Look up elliot wave. Some people seem to use it profitably, but you could also argue that the eliot wave structure is only obvious after it has been completed.

 

[rederob]

My view is we are very close to a major sharp price upswing in nickel equities, which only needs to be supported by nickel price consolidation (via reduced speculation).

I think the time has come.

 

[YOUNG_TRADER]

I think the time has come.

Red don't follow the fundamentals of Nickel that closely, care to educate me on your view a little?


Thanks in advance

 

[rederob]

Red don't follow the fundamentals of Nickel that closely, care to educate me on your view a little?
Thanks in advance

I follow nickel a lot.
Trust me.
Consider yourself educated.

 

[Kipp]

I think the time has come.

Yep, very good day for SMY and MCR. Does anyone else ever feel like your stocks take off the day/week after you let 'em go? I should really stop checking the SP of stocks I've sold off--- it's like dealing out a poker hand once you've folded...

 

[rederob]

Oh, some facts might help:
The bull market began for nickel on September 23, 2002 when the price of nickel stood at $2.87/lb.
The first upturn lasted nearly 15 months; nickel closed at $8.01/lb on January 7, 2004.
This was followed by a retreat that ended four months later when, on May 18th, 2004, nickel closed at $4.79/lb.
A further short rally lasting 2 months saw nickel close at $7.23/lb on July 7. Two months later nickel fall back to $5.46/lb on September 9th.
Another burst north saw nickel close at $7.53/lb on October 8, 2004: It fell more dramatically, closing at $5.79/lb just 3 weeks later on the 26th October.
Consolidation concurrent with uptrend lasted nearly eight months, seeing nickel peaking on June 3, 2005 at $7.58/lb.
Five months later it hit a low of $5.24/lb on November 3, 2005.
On May 26th, when nickel closed at $10.43/lb, some pundits have nickel pegged at its cyclical high.
But not me.
Before the year is out we should claim a plus $11/lb figure which I round off to a $25,000/tonne number for good measure.