NICKEL. An Introduction in the Hindsight

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1 NICKEL An Introduction The name is derived from the German word "kupfernickel" meaning Devil's copper or St Nicholas's (OLd Nick's) copper. Nickel is a silvery-white metal with a slight golden tinge that takes a high polish. It is one of only four elements that are magnetic at or near room temperature, the others being iron, cobalt and gadolinium. Nickel belongs to the transition metals and is hard and ductile.the metal is chiefly valuable in the modern world for the alloys it forms; about 60% of world production is used in nickel-steels (particularly stainless steel). Because of its resistance to corrosion, nickel has been occasionally used historically as a substitute for decorative silver. Major producers of Nickel are Russia, followed by Australia, Canada, New Caledonia and Indonesia, which represents over 65% of total world production. World primary nickel consumption is about 1 million tons. Consumption centers are Japan 2 lakh tons and European Union 3.74 lakh tons in the Hindsight Oversupply concerns made Nickel worst performing metal amongst the base metals complex in Nickel prices underperformed on MCX as well as on the LME last year. Rising demand for Nickel Pig Iron (a substitute for nickel) has been a key swing factor for decline in nickel prices in 2012.

2 In addition, news that Anglo American Plc and Vale SA have spurred investment in new mines or are expanding existing ones suppressed prices further. LME stocks of refined nickel increased by 48k tonnes year to date, indicating a solid production surplus of around 3% of the market. Nickel prices remained in a tight range in 2012, trading between Rs Rs on MCX. Favourables for Nickel Prices in 2013 Vale s 53,000 tpy Onca Puma ferronickel operations requires a complete furnace rebuild, with production not likely to restart until mid-2013 at the earliest, with press reports indicating Vale may take ~$1 billion write down on the outage. Anglo s 40,000 tpy Barro Alto Ferronickel operation suffered a kiln sidewall collapse in Line 1 on October 15, with the likelihood that production will not now reach full capacity by the end of the year, as hoped. Stainless steel output, accounting for two-thirds of refined nickel demand, is picking up in China led by improving conditions in the primary end-use sectors for stainless steel (housing, transportation and home appliances).

3 Chinese stainless production is expected to grow by between 4-5% in 2012, modest by recent historic standards, but positive in contrast to other regions. The US market has been one of the brighter spots in 2012, with positive stainless demand seen from transport and construction sectors, as well as demand from such areas as water treatment plant. Stainless steel melt production has grown by 4% in 2012, pulling nickel demand up by a similar percentage. Overall nickel demand globally is expected to grow by close to 5% in 2013, rising to 1.78 million tons, pushed largely by better stainless melt rates in the US and China. Concerns for Nickel prices in 2013 According to International Nickel Study Group (INSG) global refined Nickel markets was likely to be surplus of metric tonnes in 2012 before to be in further increasing to metric tonnes in The production of refined Nickel is further expected increase to 1.78 million tonnes in 2013 from 1.69 million tonnes in 2012, as per INSG. Nickel market is on the cusp of facing significant surpluses due to a tidal wave of new production from RKEF (Rotary Kiln/Electric Furnace) based NPI producers in China, and HPAL and Ferronickel projects in the rest of the world. Pig Iron is the one of the greatest threats to the projected rally in Nickel because of its growing, production. Output is expected to be at least 300,000 tons in 2012 and 330,000 tons in 2013.

4 Fundamental Outlook 2013 Our view of a cyclical pick-up in refined nickel demand in 2013 remains unchanged. However, nickel remains in abundant supply, both from traditional ferro-nickel and the new HPAL technology, but also from low-cost nickel pig iron output in China. Prices are expected to remain range-bound and increasingly determined by the marginal cost of production of Chinese nickel pig iron. Technological improvement is expected to continue to lower the upper end of the nickel cost curve. We are bullish on short-term prices due to setbacks at several ramp-ups and existing operations and improving demand outlook, particularly from stainless steel. In the medium-term, we expect prices to remain range bound, in Rs. 840 Rs range for 2013.

5 Technical Outlook on MCX Nickel March In Jan 2013 Nickel prices had made a high of After a strong rally Nickel prices has been under some pressure and is currently trading around 914 which has fallen almost 10 % from its high. Though prices are expected to bounce back form current levels but until and unless market gives weekly closing above 930 we are expecting consolidation and correction in the prices. A next major trend line support is at 880.A closing below the trend line would then suggest a possible downside near levels. On the upside, above 930 will indicate short term bottoming and bring rebound which can take price to a 1000 levels. But a weekly sustainable break of 1000 psychological level is needed to indicate reversal. Or risk will stay on the downside. As far as pull backs are concerned, the uptrend line at should provide support and a bounce back is expected which could take the price to The preferred strategy favors buying nickel above 930 for the Target of with Stoploss of 870.

6 Disclaimer: This report is neither an offer nor a solicitation to purchase or sell Commodities. The information and views expressed herein are believed to be reliable, but no responsibility (or liability) is accepted for errors of fact or opinion. Writers and contributors may be trading in or have positions in the Commodities mentioned in their articles. Neither Ventura Commodities Private Limited nor any of the contributors accepts any liability arising out of the above information/articles. Reproduction in whole or in part without written permission is prohibited. This report is for private circulation