I do get your point V_H and MCR is my favourite out of all the...

I do get your point V_H and MCR is my favourite out of all the small nickel miners but I think it's still too early to tell if this is a bottom with nickel stocks at historic levels IMO...

Will prices rise before the end of year ???


Nickel Deficit Diminishing
FNArena News - October 01 2015

- Lack of supply discipline
-Weak stainless steel demand
-Hidden stockpiles lurking?

By Eva Brocklehurst

Several indicators suggest the expected supply deficit in the nickel market is diminishing. A lack of output discipline, weak demand and rising inventories are keeping prices low. ANZ Bank analysts note, outside of China, reductions in output have been rare and those companies which closed operations generally did so for non-financial reasons.

The falling trend in London Metal Exchange inventories did ease in July but there are suspicions the reduction was not emanating from increased consumption but because nickel was moved into non-bonded warehouses in China.

As evidence, despite sustained price pressures, global mining output has changed relatively little, the analysts observe. At the other end of the production line world stainless steel demand, the major use of nickel, is likely to grow by only 1.0%.

In China a number of stainless steel plants are considering a break in production while export-driven demand is sliding. This leads to suspicions there are hidden nickel inventories in Asia. Nearly 100,000 tonnes is suspected of being held off-warrant and there is around 1mt of nickel in stockpiles.

A substantial deficit in 2016 is looking increasingly unlikely and the ANZ analysts have reduced short-term price targets. Nickel prices are expected to average US$11,400/tonne in 2016 and US$14,000/t in 2017 , down 16.2% and 7.3% on prior forecasts respectively.

Nickel prices are down 38% this year and eating into the miners' cost curve. The analysts suspect a reason output has not responded is that the lower half of the cost curve is dominated by major diversified miners which have shown a reluctance to cut production for a variety of reasons.

Expectations for higher prices to eventuate may also be keeping operations in production. The Indonesian export ban is being offset by increases in output from the Philippines, Madagascar, Guatemala and North America.

In terms of stainless steel demand, the export-driven part of China's market carries further downside risks, the analysts contend. Exports have fallen over 36% since June 2014. Anti-dumping measures introduced by Europe appear to have been successful in curtailing Chinese imports. A halving of China's stainless steel exports amid subdued domestic demand could mean global nickel consumption ends up lower this year.

As China's nickel market balance was largely in negative since the Indonesian ban on exports - the largest nickel producer - was introduced, the analysts observe inventory has been drawn down and consumers have commenced re-stocking, taking advantage of low prices.

Nevertheless, real demand remains stagnant while apparent consumption - which includes production plus net imports - has surged. While still expecting a structural deficit in 2016 the analysts suspect the impact on the price of nickel from a tightening market is now going to be much less.

With over 1mt in nickel stockpiles, the 140,000t deficit that is forecast over the next three year appears insignificant. Hence, the price reaction to the tightening market in 2016 is expected to be muted.



Diesel...