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Nickel Prices Have Been Heading Down and Will Probably Stay Down

By Brooke C. Stoddard

Nickel, which is a major ingredient in stainless steel, has been less costly since the beginning of the year and will likely not turn up again soon. The main reasons are that demand for stainless steel outside China is weak and stockpiles of nickel are relatively high. Macquarie Commodities Research, an Australian company, issued a report in the autumn predicting world nickel supply being greater than world demand until 2017. 

An analyst for Macquarie was quoted by Bloomberg as saying “From a fundamental perspective, there is no reason for optimism about the nickel price in 2013 unless there are large-scale production cuts.” 

Nickel reached a five-year high in late winter of 2011 at more than $28,000 a metric ton (tonne) and has largely been slipping since. It slid to under $18,000 a tonne in the fall of 2011 then rallied to more than $20,000 in early 2012. But the European debt crisis and weakness in the Japanese economy sent nickel prices on the skids again, to less than $16,000 a tonne in August 2012. At the same time, stocks of nickel were building up in London Metal Exchange warehouses to levels not seen in several years. Nickel prices then settled into a trading range of between $15,500 and $18,000 a tonne. 

Predictions from just 8 months ago were that nickel would rise in price slightly in 2013, but these forecasts that have yet to be realized. The major bank HSBC believed nickel would move slightly higher, as did RBC Capital Markets, which believed nickel would move above the $19,000 mark, and Zacks Investment Research, which believed nickel would rally with a recovering U. S. economy. HSBC, for one, has now lowered its predictions for nickel prices for 2013.

The World Bank’s Development Prospects Group also lowered its estimates for nickel prices from its January 2013 report. Last month’s report is predicting the average annual price for nickel in 2013 at $17,000 a tonne and next year at $18,200 (both in nominal U. S. dollars). The first figure is lower than in the January report, which predicted the prices at $18,000 and $18,200 respectively. Both the January and the May reports predict slight increases up to 2017: $19,407 in the January report, lowered to $19,323 in the May report. After next year, the World Bank sees nickel prices rising slightly higher than inflation.  Figures it predicts for nickel prices in real 2005 dollars are: for 2013 $13,835; for 2014, $14,501; for 2015, $14,463, and for 2016, $14,518.

1 Macquarie Commodities Research
2 Bloomberg, April 19
3 IndexMundi

Brooke C. Stoddard is an Alexandria, Virginia-based writer covering business, manufacturing, energy, and technology.

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