While cautious (thanks Brucey!!!) - there is now quite a bit of evidence that china (12 months after everyone thought - incld me) is buying physical to meet production......
chk the last wsa preso........
the "interesting" thing is that most producers and intermediaries have "destocked" .......and prod and demand out of china is holding up ......
the stockpiles are slooowly being eaten (1600-2500 t per day) .....prob as result of slower rampu up of new indo plants (fe-ni) .....
the "low" price means:
1. any new large-scale fe-ni plants will NOT be able to get debt funding (circa 7us/lb reqd ......+ certainty over future price for hedging and assoc debt)....
2. a few companies have gone broke ........takes some time to "restructure" and then restart .......
3. some projects out there need significant capital for start-up ......equity funding in current environment is "problemetic" at best........
little MCR - is a great call option over ni prices .......and as a pure resource (as mentioned previously) the last "large-ish" sale was kagara's and wsa (depressed ni price) ..........circa 73m (plus tollin agreement for 2yrs.....) ....this "implies" a 110-130m corp valn for this stock ......
sure - the type of asset is a smidge different ......as it the cost structure (bhp costs versus wsa own toll costs...)....
anyways - this thing is a steal ....(imho)
rgds
V_H
Nickel Q3 forecast 2015 from Fastmarkets, page-15
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