Wednesday, December 31, 2014

Mining in 2015: Nickel price promises much

Mining in 2015: Nickel price promises much

What happened in 2014:

The metal was languishing at multi-year lows in January but against market expectations Indonesia stuck to its guns and stopped nickel ore from leaving its shores.
Reaction was muted at first – unlike LME-watchers Chinese nickel pig iron producers took them at their word and amassed millions of tonnes of nickel laterite. Tensions with Russia and fears about Norilsk added spice and by May nickel scaled $20,000.
China will run out of stocks of the good stuff soon enough, forcing mills to buy pricier sulphides
Ever-volatile St Nick soon disappointed again and will end 2014 with barely a double digit gain as the Philippines take up the slack, inventories stay stubbornly high and old bugbear, China’s economy, drain investor confidence.

How things will change in 2015:

The Philippines can’t do anything about their grades or their monsoons and China will run out of stocks of the good stuff eventually (as soon as April?), forcing mills to buy pricier sulphides.
Stainless steel growth rates are strong with robust auto sales the US, Europe, and Japan and China’s bumping manufacturing to record 21.4m units.
After a decline of 9% in mining output in 2014, another 6% contraction is forecast for 2015 despite an additional 1–2mt from New Caledonia.
Everything nickel had going for it in 2014 will only become more evident during 2015.

Price end-2015:

Not over $20,000, but that may be too pessimistic

All bets are off if…

Indonesia – even partially – lifts its ore export ban (don’t worry, won’t happen).

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