SG:Credit Suisse AG raises nickel price forecast by 5pct for 2012
Credit Suisse AG in September 2011 raised its nickel price forecast for 2012 by 5%, 18% in 2013 and 28% for 2014, citing the rising cost of Chinese nickel pig iron, the failure of some new projects outside China to meet delivery targets and the redressing of excessive production of stainless steel in China.
Beijing Antaike Information Development Co and Mysteel.com trimmed their pig iron forecasts this month for output from China, the biggest producer, by as much as 12% for 2011 to 240,000 tonnes. Nickel fell 39% from a February high to this year's low of USD 17,600 as investors concern that a global economic slowdown would curb metal demand.
Mr Fan Runze analyst at Antaike said that "Nickel prices below USD 20,000 a ton would attract usage of the metal. ‘The prices are forcing some pig iron producers to cut output and users to restart purchasing."’
Mr Wang Chunfang analyst at Mysteel.com said that production of high grade nickel pig iron may have been cut by a quarter at Chinese provinces including Inner Mongolia and Shandong after steelmakers increased purchases of refined nickel. Inner Mongolia Lutai Specialty Steel Co, the province's second biggest pig iron producer, has delayed starting up two new production lines because of the slump in orders.
Mr Zhou Wenbiao, an official at Inner Mongolia Lutai Specialty Steel, said that "We've halted our only production line of nickel pig iron earlier this month because we incurred losses in the production. We have halted purchases of laterite ore for a while. We are very free now, we have nothing to do."
China's imports of laterite ore, the raw material to make nickel pig iron, reached 26.5 million tonnes in the first eight months of this year, exceeding the 25 million tonnes for all of 2010, following a production spree of the nickel alternative.
According to the International Nickel Study Group, China produced 165,000 tonnes of pig iron in 2010, up from 90,000 tonnes. Output reached a monthly high in July this year and began declining in August.
Mr Jim Lin, a Beijing based senior consultant of steel and raw materials at CRU, said that "If the nickel price continues to trade at a low level, nickel pig iron production will be affected and we will adjust our forecast depending on market condition."
