CO:Nickel becomes worst performer in base metals pack
MUMBAI (Commodity Online): Nickel futures are the worst performer in the base metals bourse since the beginning of May. The metal has fallen continuously from Rs.1213 at MCX most active June futures towards 1023, where it closed on Wednesday, down an incredible 15 percent. Meanwhile, the losses for the other metals were negligible during the period, amounting just over 2 percent for copper and around 1 percent for lead and zinc at MCX.
Nickel, more than 60 percent of which is used in stainless steel, was the weakest in the recent days owing to the fall in demand for steel market. Even the weakness in the US dollar failed to incite strength in the metal, which helped other metals to minimise losses and even recover some of it post commodity sell off.
The stocks of nickel at warehouses monitored by the London Metal Exchange are swelling, clearly pointing out to the dull demand for the metal in the market.
Jinchuan, the largest nickel producer of China, has reduced prices for the two grades in its product line by 3000 Yuan per metric tonne, or 1.7 percent on Wednesday. The company had already reduced prices of its products by 3000 Yuan earlier during the month of May.
According to a report from Platts Jinchuan has a nickel production capacity of 150,000 mt/year, which accounts for about 90% of China's total capacity. This will increase to 250,000 tonnes per year by 2015 following the startup of the company's 100,000 per year electrolytic nickel smelter at Fangchenggang in the Guangxi Zhuang autonomous region.
In addition, analysts from Antaike Information Development Co. sees the production nickel pig-iron, a low cost substitute of refined nickel, to rise towards 240,000 tonnes in 2011 from 160,000 tonnes from 2010, a Bloomberg report shows. The report also mentions the forecast of Norlisk, which sticks by its view that the nickel market will rebalance this year from a deficit last year. This means that the production will be rising faster.
Figures from the International Nickel Study Group showed that nickel usage will grow 1.54 million tonnes as compared to the production that is expected to rise by 1.60 million tonnes in the year 2010.
