Here we have a wave 1 up to Jan04, a very messy corrective move back to wave 2 towards the end of 2005. And now it looks like an impulsive move up to a wave 3 somewhere (terminology thanks to NR).
Fundamentally, we know the iron ore market is very tight (india is now holding iron ore back from spot market for it's own steel producers). Nickel is needed for stainless production. Nickel has been ignored for the red and yellow alternatives up until recently.
michael_selway
23rd-May-2006, 08:44 AM
Could it be?
Here we have a wave 1 up to Jan04, a very messy corrective move back to wave 2 towards the end of 2005. And now it looks like an impulsive move up to a wave 3 somewhere (terminology thanks to NR).
Fundamentally, we know the iron ore market is very tight (india is now holding iron ore back from spot market for it's own steel producers). Nickel is needed for stainless production. Nickel has been ignored for the red and yellow alternatives up until recently.
Hm i personally dont think so but things may change. Btw u also need to look at LME Supplies
MS MS, how is it that LME supplies have no bearing on Nickel prices? In the Zinc thread, everyone is getting excited that LME stocks will deplete in Oct at current rate. Nickel will be depleted in 40 DAYS at the current rate. I don't get it...
nor do I really understand why the Ni boys have been punished while Gold and Zinc prices have fallen to hell (i.e. SMY and MCR) is it just gneral bearish sentiment?
rederob
23rd-May-2006, 08:45 PM
MS, how is it that LME supplies have no bearing on Nickel prices? In the Zinc thread, everyone is getting excited that LME stocks will deplete in Oct at current rate. Nickel will be depleted in 40 DAYS at the current rate. I don't get it...
nor do I really understand why the Ni boys have been punished while Gold and Zinc prices have fallen to hell (i.e. SMY and MCR) is it just gneral bearish sentiment?
Kipp
I think MS is implying that the LME situation is supportive.
Nickel stocks are leaving warehouses rapidly, and this will shortly turn into a panic (typically when under 10,000 tonnes is left and the rate of drawdowns remains robust).
Don't worry about equity prices when the fundamentals are supportive. If the price dips, buy more - especially SMY as it's well and truly oversold and undervalued by every yardstick.
Nickel prices take a lead from steel supply - if steel is in short supply, mills will crank up and consume great quantities of nickel. But steel mills are expensive to both crank up and taper off, so you get steel output to excess.
As soon as you see steel prices take a u-turn in months to come, bail out of nickel equities as the metal price will fall considerably.
michael_selway
23rd-May-2006, 11:14 PM
MS, how is it that LME supplies have no bearing on Nickel prices? In the Zinc thread, everyone is getting excited that LME stocks will deplete in Oct at current rate. Nickel will be depleted in 40 DAYS at the current rate. I don't get it...
nor do I really understand why the Ni boys have been punished while Gold and Zinc prices have fallen to hell (i.e. SMY and MCR) is it just gneral bearish sentiment?
is that about 12 months ago, Nickel LME supplies were only 5000 tonnes, much lower than today, yet prices are higher now than when supplies were lower?
Also during the last financial yr, Nickel LME Stocks were actually increasing at quite a fast pace, but for soem reason starting in Jan 06, its going down again?
Would you suspect speculative fund buying in which case they can dump just as fast (it dropped to $5/lb in Nov 05)? or is it start of a "genuine" downward trend, ie demand > than supply?
This relative unknown is where the risk lies. Contrast that with Zinc
8. Global usage of refined zinc metal is forecast to increase by 4.8% to 11.19 million tonnes in 2006. Growth will be strongest in Asia where demand is forecast to rise by 7.3% in China, 9.1% in India, 4.5% in Japan and 4.4% in the Republic of Korea. Demand in the United States is expected to recover by 11.4% after falling steeply in 2005. In Europe, increases in Finland, Germany, Poland, the Russian Federation and Spain will be partially balanced by falls in Belgium, France and Italy resulting in an overall rise of 1.4%.
9. It is anticipated that global zinc mine output will increase by 4.5% to 10.42 million tonnes. Production in Australia is forecast to rise by 8.9% and in India by 10%. European output will benefit from increases in Greece, Ireland, the Russian Federation and Sweden and is expected to rise by 8%.
10. A further 4.3% increase in world refined zinc metal production to 10.71 million tonnes in 2006 will be influenced primarily by rises of 8.6% in China and 44% in India. Increases are also forecast in Australia, Belgium, Canada, Kazakhstan, the Republic of Korea and the Netherlands.
11. Chinese net imports of zinc metal are forecast to rise to 285,000 tonnes. It is expected that most of this material will continue to be sourced in Kazakhstan.
12. Overall, after also having taken into consideration release from the United States Defense National Stockpile, the Group continues to anticipate a substantial deficit in the Western World refined zinc market. Current forecasts indicate a shortfall of 437,000 tonnes
Watch this space:
Nickel inventories fell a stunning 14% or 3,018 tonnes during the week.
At the same time, the proportion of cancelled warrants to total increased, implying more sharp inventory falls to come.
This is also the time of year when Norislk has trouble getting its nickel from Dudinka to European ports due to the Yenisei River becoming unnavigable. With Nickel closing the week at $23,000 per tonne - a contract record high - we are likely to see a tilt at $25k in the near term.
My favourite little nickel play, Sally Malay (SMY) is heading for an exceptionally profitable year.
Kipp
27th-May-2006, 12:48 PM
Watch this space:
Nickel inventories fell a stunning 14% or 3,018 tonnes during the week.
At the same time, the proportion of cancelled warrants to total increased, implying more sharp inventory falls to come.
This is also the time of year when Norislk has trouble getting its nickel from Dudinka to European ports due to the Yenisei River becoming unnavigable. With Nickel closing the week at $23,000 per tonne - a contract record high - we are likely to see a tilt at $25k in the near term.
My favourite little nickel play, Sally Malay (SMY) is heading for an exceptionally profitable year.
The comforting thing is that even if Ni does see a correction back down to $20K/tonne all the Ni producers would still be making a squillion.
why is SMY your favourite play?
specman
27th-May-2006, 01:06 PM
I wouldn't get too excited about nickel yet.Looking at the 1 year LME stock chart,nickel was down below 8000 mid last year and made a swift recovery.The crucial factor is what is happening with mining supply.Are we going to see a flood of nickel suddenly appear?Does anybody have information on this?
I like zinc more because there has been little exploration in the past,it takes years to open new mines and supply is not going to catch up before 2008 maybe later.Zinc demand is also fairly inelastic.
michael_selway
27th-May-2006, 02:54 PM
I wouldn't get too excited about nickel yet.Looking at the 1 year LME stock chart,nickel was down below 8000 mid last year and made a swift recovery.The crucial factor is what is happening with mining supply.Are we going to see a flood of nickel suddenly appear?Does anybody have information on this?
I like zinc more because there has been little exploration in the past,it takes years to open new mines and supply is not going to catch up before 2008 maybe later.Zinc demand is also fairly inelastic.
exactly the current demand/supply and more importantly the future demand/supply for Nickel, however live warrants is decreasing atm. But again it could increase fast any time if current Demand < Supply
Here's some interesting info for some of you nickel bulls out there.
I did a bit of googling and it appears that at least 5 automobile manufacturers are planning to use nickel-metal hydride batteries to power their gasoline/electric hybrid vehicles for the 2007/2008 models.Demand for hybrid cars has been accelerating since 1999 and will only get more popular with high petrol prices.
Kipp
28th-May-2006, 08:47 PM
Demand for hybrid cars has been accelerating since 1999 and will only get more popular with high petrol prices.
Not in Australia it hasn't... fuel $1.40/litre and still idiots drive 4WDs in Melbourne. Would love to hybrids take off, even if it requires a little government subsidy..l. and not just for Nickels sake!!!
michael_selway
30th-May-2006, 12:22 AM
Not in Australia it hasn't... fuel $1.40/litre and still idiots drive 4WDs in Melbourne. Would love to hybrids take off, even if it requires a little government subsidy..l. and not just for Nickels sake!!!
Nickel May Extend Record Gains as Inco Strike Looms (Update1)
May 29 (Bloomberg) -- Nickel prices may extend record gains on buying by hedge funds and other speculators if workers go on strike at Inco Ltd.'s operations in Canada, which could cut global supply of the metal by eight percent.
The union representing more than 3,000 workers at Inco advised its members yesterday to reject a contract offer from the world's second-largest producer of nickel, which is used to rustproof steel. Workers will vote May 30 and May 31 on the offer, the union said. The current contract for employees running Inco's operations in Sudbury, Ontario, expires May 31.
``Nickel prices may reach $25,000 a ton very soon,'' said Le Yuemin, assistant general manager of Ningbo Tenglong Stainless Steel Products Co., which he described as China's biggest producer of such products. ``I don't think we have seen the top, given the tight supply,'' he said by phone today.
Nickel prices have increased 70 percent this year and reached a record $23,050 a ton on May 26 as investment funds bet supply won't meet rising demand from stainless steelmakers such as Arcelor SA. Stockpiles of the metal monitored by the London Metal Exchange have fallen 48 percent this year.
Any protracted strike at Inco's Sudbury operations would lift nickel prices, according to Eramet SA, the world's largest producer of ferronickel, an alloy used in stainless steelmaking.
``We can have events like a strike at the end of this month at Inco,'' Francois-Gabriel Sauvage, Eramet's executive vice president, said in an interview May 22 at a conference in Shanghai. ``If the strike stays more than two to three months, of course it could be tense on the market.''
Labor Talks
Inco, which is in a bidding war with Xstrata Plc to buy Canadian copper and nickel producer Falconbridge Ltd., has been negotiating with the union since April on a new labor accord for employees at its operations in Ontario's nickel-rich Sudbury basin. The union is seeking a no-layoff provision, higher wages and better benefits amid rising nickel prices.
``We think it's a good offer, otherwise we wouldn't have put it forward,'' Inco spokesman Cory McPhee said yesterday in an interview. He declined to provide details of the offer until after union members have voted on it.
Before Inco negotiated the current agreement in 2003, a three-month strike by 3,300 miners and production workers cut output by 30,000 tons, driving nickel prices 5.4 percent higher.
Toronto-based Inco said last month demand for the metal will outpace output this year because of more use by stainless steel producers, which consume about two-thirds of global supply. Fund investments in commodities may exceed $120 billion by 2008, up from $80 billion last year, according to Barclays Plc.
Money Flows
``There are huge money flows going into the commodities market,'' Geoff Boyd, a CLSA Asia-Pacific Markets analyst in Singapore, said an e-mailed reply to questions on May 17. Nickel prices are partly ``rising on speculation in the commodities by hedge funds,'' he said.
Nickel demand will rise 8.1 percent this year and mining companies will boost production by about 5.4 percent, the Lisbon-based International Nickel Study Group said last month. Minara Resources Ltd., Australia's second-biggest nickel producer, said in March it expects demand for the metal to grow between 4 to 5 percent in 2006 as consumption rises in Asia.
``It appears that the nickel market is tight,'' Rohan Kendall, a metal analyst at the Australian Bureau of Agricultural and Resource Economics, said in a e-mail May 18. ``This provides support for the recent rise in prices which has been compounded by activity from fund managers and speculators.''
China's Demand
Nickel demand in China, which last year replaced Japan as the world's biggest user of the metal, may climb 15 percent to 225,000 tons this year, as rising incomes spur consumption of washing machines and cars which use stainless steel, Andrew Harrington, an industry analyst at the Australia & New Zealand Banking Group, said from Sydney on May 17.
The metal may rise as high as $28,000 driven by demand from stainless steelmakers, Li Long, president of the China Stainless Steel Council, said May 22.
Sumitomo Metal Mining Co., Japan's biggest nickel producer, forecasts global nickel supply this year will exceed demand by 6,000 tons, assuming there is no disruption, Masahiro Kamiya, manager of its nickel business unit, said in Shanghai May 22.
Prices of hot-rolled coil stainless steel imported into China, a benchmark in Asia, have risen 33 percent this year to $2,650 a ton as of May 19, the highest since 1995, according to London-based Metal Bulletin Plc. This also reversed last year's 19 percent drop in prices.
``Stainless steel prices are too high,'' Ningbo Tenglong's Le said in an earlier interview May 23 on the sidelines of a stainless steel conference in Shanghai. ``In the next two months, they will still rise because of high nickel prices.''
Substitution Threat
To be sure, a further rally in nickel prices may be capped by the threat of substitution, Mark Pervan, head of research at Daiwa Securities SMBC, said from Melbourne on May 17. ``Nickel is vulnerable to substitution, like we saw in 2005.''
Stainless steelmakers last year used less nickel, choosing to use more manganese and molybdenum to increase the strength and anti-corrosive properties of the alloy. In contrast with the gains in nickel prices, molybdenum prices gained 10 percent this year to $61 a kilogram as of May 12, while manganese has fallen 18 percent, according to Metal Bulletin.
Table of Forecasts on Nickel Prices, Demand-Supply Balance
Company Average Price Forecast* Demand-Supply**
ANZ Bank $13,500 8,000-ton surplus
ABARE $13,705 4,000-ton surplus
AME Mineral $15,278 2,000-ton surplus
Deutsche Bank $15,520 4,000-ton surplus
Daiwa $17,703 7,500-ton surplus
Sumitomo Metal -- 6,000-ton surplus
Eramet -- 30,000-ton surplus
*in dollars a metric ton, basis LME cash.
**measures how much supply will exceed demand by in metric
tons.
Analysts' forecasts gathered on May 17 and reconfirmed on
May 22. They don't include the impact of an Inco strike.
Sumitomo's and Eramet's forecasts were given May 22 in
Shanghai.
nizar
30th-May-2006, 09:15 AM
What are the best stocks to buy that give exposure to nickel?
ie. the ones that are producers unhedged that move well with the nickel spot price
Any ideas?
michael_selway
30th-May-2006, 12:56 PM
What are the best stocks to buy that give exposure to nickel?
ie. the ones that are producers unhedged that move well with the nickel spot price
Any ideas?
JBM, MCR, IGO, SHN, MRE, NKL?
however all of them appear to have specific risk, that is, mine problems or short mine life?
thx
MS
Archinos
30th-May-2006, 01:43 PM
Although not a producer, DNL is not far from a scoping study for the Dikoloti Nickel prospect. They've also got potential for copper-silver at their Maun prospect- expect results on both fronts soon. ;)
Kipp
30th-May-2006, 10:42 PM
JBM, MCR, IGO, SHN, MRE, NKL?
however all of them appear to have specific risk, that is, mine problems or short mine life?
thx
MS
I think SHN is still in the red....
michael_selway
1st-June-2006, 10:44 AM
MS, how is it that LME supplies have no bearing on Nickel prices? In the Zinc thread, everyone is getting excited that LME stocks will deplete in Oct at current rate. Nickel will be depleted in 40 DAYS at the current rate. I don't get it...
nor do I really understand why the Ni boys have been punished while Gold and Zinc prices have fallen to hell (i.e. SMY and MCR) is it just gneral bearish sentiment?
http://img144.imageshack.us/img144/243/lme3uq.jpg
Nickel quite alot "in" today, but look at Copper and Aluminum, so much "in", which adds to the live warrants
thx
MS
rederob
1st-June-2006, 12:26 PM
[IMG]Nickel quite alot "in" today, but look at Copper and Aluminum, so much "in", which adds to the live warrants
MS
You need to watch the rate of change of cancelled to total to get a better picture of trend.
We are enamoured to zinc because it is flowing out of warehouses at a rapid clip. However, the cancelled to total ratio has benn declining for many weeks.
It's not always quite that easy.
Copper's increase was isolated to a single large warranting at LME Singapore, most likely from China's State Reserve Bureau. If that is true, then copper is fundamentally stronger, because warrantings from metal producers should generally flow into exchange warehouses. Inventory and the like that flow into warehouses to take advantage of high spot prices simply make the overall market tighter going forward.
michael_selway
2nd-June-2006, 12:42 AM
MS
You need to watch the rate of change of cancelled to total to get a better picture of trend.
We are enamoured to zinc because it is flowing out of warehouses at a rapid clip. However, the cancelled to total ratio has benn declining for many weeks.
It's not always quite that easy.
Copper's increase was isolated to a single large warranting at LME Singapore, most likely from China's State Reserve Bureau. If that is true, then copper is fundamentally stronger, because warrantings from metal producers should generally flow into exchange warehouses. Inventory and the like that flow into warehouses to take advantage of high spot prices simply make the overall market tighter going forward.
Hi Rederob, can I ask a question
http://img144.imageshack.us/img144/243/lme3uq.jpg
Ok lets say below all of the Zinc 72775 Cancelled Warrants became "out". Everything else stays as it is. Therefor there is no Cancelled Warrants and 166k Live Warrants (total = 166000)
1) Next day lets say 16000 become Cancelled. So 16000/166000 = 9.64%
2) Next day lets say 16000 become Cancelled and 16000 become "out" from Cancelled Warrants. So 16000/150000 = 10.66%
3) Next day lets say 16000 become Cancelled and 16000 become "out" from Cancelled Warrants. So 16000/134000 = 11.94%
rate of change of cancelled to total
So based on the above quote its negigible the % increases? what does it mean anyway?
However live warrants have dropped alot?
118000/166000 = 71.08% or about 29% drop in 3 days?
thanks
MS
rederob
2nd-June-2006, 10:47 AM
MS
Your example shows a clear trend - 2.4% percentage point change in 3 days is not "negligible".
Another way of doing the maths on your scenario suggests that the variation was almost 25% in those 3 days, viz 2.4/9.6 - so isn't that an interesting take!
You can chart the rate of change, and with even "negligible" variations it may be possible to notice a "steady" trend, rather than a robust one.
If you are a daily follower of the fundamentals, these trends are often quite obvious.
On the nickel front, it is blatantly obvious that the fundamentals are tightening more rapidly by the day, with an overnight cancellation accounting for over 6% of total warranted stock - bringing the cumulative share of cancelled to total stocks to 20%.
The problem we have with the maths as the denominator gets smaller, is that the statistics tend to become meaningless and should be ignored to a large degree: Concentrate on the raw numbers and trends.
michael_selway
2nd-June-2006, 11:11 AM
MS
Your example shows a clear trend - 2.4% percentage point change in 3 days is not "negligible".
Another way of doing the maths on your scenario suggests that the variation was almost 25% in those 3 days, viz 2.4/9.6 - so isn't that an interesting take!
You can chart the rate of change, and with even "negligible" variations it may be possible to notice a "steady" trend, rather than a robust one.
If you are a daily follower of the fundamentals, these trends are often quite obvious.
On the nickel front, it is blatantly obvious that the fundamentals are tightening more rapidly by the day, with an overnight cancellation accounting for over 6% of total warranted stock - bringing the cumulative share of cancelled to total stocks to 20%.
The problem we have with the maths as the denominator gets smaller, is that the statistics tend to become meaningless and should be ignored to a large degree: Concentrate on the raw numbers and trends.
The thing about Nickel is that LME supplies were much lower not that long ago, Aug 05
MS
You need to look at the full picture.
Cancellation rates have been increasing as inventory stocks have been decreasing, and nickel prices have been increasing (monthly basis) while nickel equity prices decreasing.
Add to this equation the recent increase in LME and Comex "margins", which should have reduced price volatility, but did little in fact!
My view is we are very close to a major sharp price upswing in nickel equities, which only needs to be supported by nickel price consolidation (via reduced speculation).
The stainless steel market is showing no weakness, and this sector probably accounts for over half the nickel sent to markets.
Those that think the commodity markets are destined to fall more may be right, but it will be due only to large-scale funds exiting the market and not to any fundamental weakness.
Be prepared for a significant rebound in the second half.
michael_selway
3rd-June-2006, 02:01 AM
MS
You need to look at the full picture.
Cancellation rates have been increasing as inventory stocks have been decreasing, and nickel prices have been increasing (monthly basis) while nickel equity prices decreasing.
Add to this equation the recent increase in LME and Comex "margins", which should have reduced price volatility, but did little in fact!
My view is we are very close to a major sharp price upswing in nickel equities, which only needs to be supported by nickel price consolidation (via reduced speculation).
The stainless steel market is showing no weakness, and this sector probably accounts for over half the nickel sent to markets.
Those that think the commodity markets are destined to fall more may be right, but it will be due only to large-scale funds exiting the market and not to any fundamental weakness.
Be prepared for a significant rebound in the second half.
Yeah ic
The real price of nickel
Source: Canadian Mining Journal
Nickel CatalogCommunications consultant and CMJ contributor Stan Sudol sent us his observations on the nickel price and how far short of a record the current value is.
"Contrary to what you may have been reading in the global media (as of May 28, 2006) nickel has not reached its historical high. That occurred in late March, 1988 when the price skyrocketed to a record-setting US$10.84/lb, a level yet to be reached during this current commodity boom. With inflation factored in, that peak would be worth US$16.78/lb.
"The record spike in price was the result of a 'perfect storm' of politics, strikes, technical problems and industry under capacity. … The straw that finally broke the camel's back was a dispute between Falconbridge and the Dominican Republic over an export tax on ferronickel shipments. … The peak price of US$10.84 didn't last long but it did establish a benchmark that has yet to be broken.
"Current global worries about Sudbury's labour negotiations [a tentative deal was reached on May 29], spring floods that are holding up Russian nickel exports and a recent transformer fire at PT Inco's Sorowako, Indonesia, operations in one of its four electric furnaces will put additional upward pressures on the current price."
http://metalsplace.com/metalsnews/?a=5379
Kipp
3rd-June-2006, 06:37 PM
Yeah ic
http://metalsplace.com/metalsnews/?a=5379
Tis a shame that stike was averted.... I was sending all the emails and letters of support I could for the miners to keep the strike up.. but those bastards crumbled!!!
Meh... guess I'll just have to hope some of those hybrid cars take off- just wait till oil clips $100 a barrel!!!!
michael_selway
5th-June-2006, 05:01 PM
JBM, MCR, IGO, SHN, MRE, NKL?
however all of them appear to have specific risk, that is, mine problems or short mine life?
thx
MS
**** forgot SMY
;)
thx
markrmau
6th-June-2006, 06:24 AM
Russia: Nickel may be added to strategic deposits list - ministry-1
http://en.rian.ru/russia/20060605/49057532.html
Means they may limit % of reserves foreign comanies are allowed to own. Doesn't mean they will stockpile Ni.
rederob
6th-June-2006, 07:03 AM
MI nickel stocks analysis: Cancelled tonnage accumulates
Metals Insider - 05 June 2006
Last week brought 3,660t of fresh cancellations, including another batch of 1,290t on Friday itself, which marked an acceleration from an already robust rate. The ratio of cancelled to total registered tonnage in the system ended the week at 28.75%, which is the highest level seen since Jun 1 last year.
That promises an extension of the already strong daily draw rates that have underpinned the current downtrend. Last week’s net decline of 1,206t was the 12th consecutive weekly fall with the geographical spread of active locations in Friday’s report attesting to the general strong demand for LME-registered tonnage right now.
Nickel's rate of drawdown will be sending alarm bells through the metals market: There is no doubt that it is the "metal for the moment" rather than for the year.
michael_selway
6th-June-2006, 09:44 AM
MI nickel stocks analysis: Cancelled tonnage accumulates
Metals Insider - 05 June 2006
Last week brought 3,660t of fresh cancellations, including another batch of 1,290t on Friday itself, which marked an acceleration from an already robust rate. The ratio of cancelled to total registered tonnage in the system ended the week at 28.75%, which is the highest level seen since Jun 1 last year.
That promises an extension of the already strong daily draw rates that have underpinned the current downtrend. Last week’s net decline of 1,206t was the 12th consecutive weekly fall with the geographical spread of active locations in Friday’s report attesting to the general strong demand for LME-registered tonnage right now.
Nickel's rate of drawdown will be sending alarm bells through the metals market: There is no doubt that it is the "metal for the moment" rather than for the year.
Yeah it might be temporary only, thats the danger of drawing conclusions too early
Again the danger lies in the "in", ie additions to Live Warrants
MI nickel stocks analysis: Cancelled tonnage accumulates
Metals Insider - 05 June 2006
Last week brought 3,660t of fresh cancellations, including another batch of 1,290t on Friday itself, which marked an acceleration from an already robust rate. The ratio of cancelled to total registered tonnage in the system ended the week at 28.75%, which is the highest level seen since Jun 1 last year.
That promises an extension of the already strong daily draw rates that have underpinned the current downtrend. Last week’s net decline of 1,206t was the 12th consecutive weekly fall with the geographical spread of active locations in Friday’s report attesting to the general strong demand for LME-registered tonnage right now.
Nickel's rate of drawdown will be sending alarm bells through the metals market: There is no doubt that it is the "metal for the moment" rather than for the year.
Hi, both Copper and Nickel had alot "in" or added to Live warrants today
Hi, both Copper and Nickel had alot "in" or added to Live warrants today
Does thsi suggest anything?
Yes
It suggests that drawdowns were not matching inflows!
Nickel still has about 30% of warranted metal ready to leave warehouses, so we need to see if inflows counter the drawdowns in coming weeks.
Hard to tell, but cancellations have continued to be robust, suggesting a heck of a lot more will need to come into LME before nickel capitulates.
Copper is not as tight, but a similar pattern to emerge. Importantly about copper, most metal is in Asia. It means that when the fundamentals perk up and prices roll upwards, a similar parabolic effect is likely later in the year.
Nickel has not gone parabolic this year yet is still trading comparatively higher than it should given the carnage suffered by copper and its cobbers.
michael_selway
10th-June-2006, 01:18 PM
Yes
It suggests that drawdowns were not matching inflows!
Nickel still has about 30% of warranted metal ready to leave warehouses, so we need to see if inflows counter the drawdowns in coming weeks.
Hard to tell, but cancellations have continued to be robust, suggesting a heck of a lot more will need to come into LME before nickel capitulates.
Copper is not as tight, but a similar pattern to emerge. Importantly about copper, most metal is in Asia. It means that when the fundamentals perk up and prices roll upwards, a similar parabolic effect is likely later in the year.
Nickel has not gone parabolic this year yet is still trading comparatively higher than it should given the carnage suffered by copper and its cobbers.
Hi ok
But does continuous large "in"s which add to live warrants mean anything?
Eg copper, nickel, aluminium yesterday
http://img81.imageshack.us/img81/8702/lme3eb.jpg
Thanks
MS
http://www.yukonzinc.com/images/clip_image002.jpg
rederob
10th-June-2006, 03:59 PM
MS
Fundamentals mean looking at the whole supply and demand equation, so daily numbers are not going to paint the picture you need to be looking at.
With nickel you will see warrantings at very few locations, and draws from many: The pace of withdrawls is greater than resupply for now on a weekly trend basis.
With copper there is a similar pattern in that resupply is largely confined to Asian exchanges, yet demand is across the board. Copper supplies in the US are tighter still with less than 10000 tonnes available, although draw rates are comparatively slow.
SHFE copper remains tight, although the China Reserves Bureau is selling old copper into the market, which has had the effect of increasing SHFE exchange stock levels. I think the Chinese need to restock on copper, so I expect they will stop selling as soon as prices come down to their buy range.
As a quick aside on copper, thin market conditions are contributing to extreme volatility, and this will continue until producers see value in forward selling into price stability rather than occasional offerings into spot.
Which brings me back to nickel: Norilsk Nickel have indicated they may withdraw from the spot market from July, which would leave the LME data in a bit of precarious situation as most inflows seem to be able to be tracked to them! We could be looking at consumers knocking directly on the door of Norilsk rather than head to their nearest LME warehouse: And that would truly set the cat amongst the pigeons.
markrmau
10th-June-2006, 08:24 PM
Which brings me back to nickel: Norilsk Nickel have indicated they may withdraw from the spot market from July, which would leave the LME data in a bit of precarious situation as most inflows seem to be able to be tracked to them!
is that the reason for nickel carnage on lme for last 2 days?
Could be putting in a wave 4 LOL.
michael_selway
11th-June-2006, 01:21 PM
is that the reason for nickel carnage on lme for last 2 days?
Could be putting in a wave 4 LOL.
is "wave 4" bullish or bearish?
thanks
MS
markrmau
11th-June-2006, 03:31 PM
Bearish. Look up elliot wave. Some people seem to use it profitably, but you could also argue that the eliot wave structure is only obvious after it has been completed.
rederob
21st-June-2006, 07:29 PM
My view is we are very close to a major sharp price upswing in nickel equities, which only needs to be supported by nickel price consolidation (via reduced speculation).
I think the time has come.
YOUNG_TRADER
21st-June-2006, 07:43 PM
I think the time has come.
Red don't follow the fundamentals of Nickel that closely, care to educate me on your view a little?
Thanks in advance :)
rederob
21st-June-2006, 08:58 PM
Red don't follow the fundamentals of Nickel that closely, care to educate me on your view a little?
Thanks in advance :)
I follow nickel a lot.
Trust me.
Consider yourself educated.
Kipp
21st-June-2006, 09:26 PM
I think the time has come.
Yep, very good day for SMY and MCR. Does anyone else ever feel like your stocks take off the day/week after you let 'em go? I should really stop checking the SP of stocks I've sold off--- it's like dealing out a poker hand once you've folded...
rederob
21st-June-2006, 09:34 PM
Oh, some facts might help:
The bull market began for nickel on September 23, 2002 when the price of nickel stood at $2.87/lb.
The first upturn lasted nearly 15 months; nickel closed at $8.01/lb on January 7, 2004.
This was followed by a retreat that ended four months later when, on May 18th, 2004, nickel closed at $4.79/lb.
A further short rally lasting 2 months saw nickel close at $7.23/lb on July 7. Two months later nickel fall back to $5.46/lb on September 9th.
Another burst north saw nickel close at $7.53/lb on October 8, 2004: It fell more dramatically, closing at $5.79/lb just 3 weeks later on the 26th October.
Consolidation concurrent with uptrend lasted nearly eight months, seeing nickel peaking on June 3, 2005 at $7.58/lb.
Five months later it hit a low of $5.24/lb on November 3, 2005.
On May 26th, when nickel closed at $10.43/lb, some pundits have nickel pegged at its cyclical high.
But not me.
Before the year is out we should claim a plus $11/lb figure which I round off to a $25,000/tonne number for good measure.
michael_selway
21st-June-2006, 11:20 PM
Oh, some facts might help:
The bull market began for nickel on September 23, 2002 when the price of nickel stood at $2.87/lb.
The first upturn lasted nearly 15 months; nickel closed at $8.01/lb on January 7, 2004.
This was followed by a retreat that ended four months later when, on May 18th, 2004, nickel closed at $4.79/lb.
A further short rally lasting 2 months saw nickel close at $7.23/lb on July 7. Two months later nickel fall back to $5.46/lb on September 9th.
Another burst north saw nickel close at $7.53/lb on October 8, 2004: It fell more dramatically, closing at $5.79/lb just 3 weeks later on the 26th October.
Consolidation concurrent with uptrend lasted nearly eight months, seeing nickel peaking on June 3, 2005 at $7.58/lb.
Five months later it hit a low of $5.24/lb on November 3, 2005.
On May 26th, when nickel closed at $10.43/lb, some pundits have nickel pegged at its cyclical high.
But not me.
Before the year is out we should claim a plus $11/lb figure which I round off to a $25,000/tonne number for good measure.
Yep Nickel price has been up generally over recent yrs although VERY volatile as mentioned above, unlike the other basemetals.
But 1 crucial point is LME supplies have been lower than current levels but prices were much lower?
imo the market is too small so thus speculative? have to buy it when it dips to be safer?
Nickel market in 6,000 tons surplus in Jan-Apr 06 – WBMS
Source: Dow Jones
See also
Nickel Board
Nickel CatalogThe nickel market recorded a small deficit of 6,000 metric tons in the first four months of 2006, with reported stocks some 9,000 tons lower, according to data released Thursday by the World Bureau of Metal Statistics, or WBMS.
Mine production rose by 1.2% to 426,000 tons, with increased Canadian output levels accounting for most of the change.
Refined nickel production rose by 3.6% to 447,000 tons, with small increases in Russian and Canadian output and the reemergence of the Philippines as a producer accounting for most of the rise, WBMS said.
In April, world nickel production was 114,100 tons and demand totaled 120,900 tons.
thx
MS
rederob
24th-June-2006, 09:45 AM
Peter Goudie, Inco's executive vice president of marketing, said the nickel market "continues to outpace expectations", and he forecasts a very strong market for the remainder of 2006.
"Previously we forecast a supply deficit of 5,000 to 20,000 tonnes for the full year," Goudie said. "We are now increasing our deficit projection for 2006 to 30,000 tonnes. Meanwhile, a number of key indicators show that nickel demand should remain robust through the remainder of the year."
Inco also noted that stainless steel inventories are at low levels globally, stainless steel production across all regions has been stronger than anticipated and nickel inventories are falling rather than rising, making the scrap stainless steel market very tight.
"All the key facts add up to a strong second half for nickel," Goudie noted.
From: http://www.chron.com/disp/story.mpl/ap/fn/3992050.html
By Chris ShawDo increased global interest rate expectations spell bad news for demand for (and thus prices of) commodities?
According to JP Morgan the answer depends on what commodity you are referring to, as in the broker's view the outlook for gold remains very positive. The broker believes, however, the story for base metals is different.
Its negative view on the base metals is based on the likelihood of slowing demand growth, thanks to a combination of weaker US growth and the impact of demand destruction thanks to higher commodity prices.
Supporting the broker's view is the recent downturn in its Global Purchasing Managers Index (PMI), which historically has provided a good guide for Global Industrial Production, which in turn has provided a good guide to the direction of metal prices.
The broker notes while growth in China continues to be strong it is not being supported by other regions, as G3 growth appears to be slowing in response to ongoing central bank tightening. The US economy is also giving an early indication base metal demand may fall, as the broker notes both the auto and housing sectors, which require large amounts of various metals, are showing signs of turning down.
Not helping is the emergence of inflation, as while an inflationary environment is good for metal prices, the move to higher interest rates to counter the trend is likely to slow economic growth globally, in turn reducing demand for the metals themselves.
Believers in the "Supercycle" thesis can point to low inventory levels as supportive for prices going forward, but the broker is not convinced of such an argument. Nickel provides an example, as the broker notes the price has moved lower in recent weeks even though LME stockpiles have also fallen.
JP Morgan explains this by noting the lower official stockpiles are simply a reflection of re-stocking by stainless steel producers, meaning supply is not as tight as official figures make it appear. The broker expects supply to increase by 4-5% as new projects come on stream, an amount enough to match demand growth and so reduce the potential for price increases thanks to a tightening in the market.
Leading nickel producer Inco last week issued a bullish outlook on the sector, but the company's assessments have met sheer skepticism in the market, including from the likes of Citigroup analysts Alan Heap, a proud promoter of the Super Cycle thesis.Inco said its revised global market balances feature a 30kt supply deficit for 2006. Heap's forecast is for a 30kt surplus for 2006, to be followed by a 8kt deficit in 2007.
However, Citigroup's resources expert also believes the primary driver of the nickel price is not its fundamentals, but the nature of ongoing aggressive speculative activity.
In contrast to the (potentially) worsening demand environment for the base metals, JP Morgan believes the gold market outlook continues to improve. Demand continues to strengthen (even if only for one-off events such as the establishment of gold Exchange Traded Funds or ETFs), but this stronger demand is not being met by higher supply thanks to declining production from South Africa in particular. This means central bank selling is required to meet the shortfall, but the quantity of this selling is limited under agreements in place between the banks.
At the same time, the broker takes the view demand could increase further if there continues to be concerns over the future direction of the US dollar, as a weaker greenback is often associated with higher gold buying as investors chase a safe haven. There has also been significant talk over the past year or so of holders of substantial amounts of US dollar foreign reserves looking to diversify their holdings, with gold given as a possible alternative.
The final point in gold's favour is the market is characterised by less significant swings in inventory than occur in the base metal markets, particularly as gold is generally very widely held. This contrasts with the base metal markets, where speculators have been regarded as responsible not only for pushing prices higher but in accentuating the recent falls as they reduce their positions.
Commodity specialists at Barclays Capital flagged over the weekend they were likely to reduce price forecasts for base metals following the decision by Barclays economists to increase their US interest rate forecasts.Barclays remains confident regarding its price forecasts for energy and agricultural resources.
thx
MS
rederob
26th-June-2006, 06:35 PM
MS
The best possible news is that the news is not as good as it could be.
Bull markets get overbought and need to come off the boil: That's happening now in the base metals.
Your above story could be found in many forms, over many months, a year ago - the prognosis going forward was for lower prices, they kept saying.
Well, here we are in mid-2006 after a mother of a correction and prices remain significantly higher than at any time in 2005.
I said a year ago (in other forums) that the pundits needed to get out of their US-centric views and look towards Asia, Brazil and Russia for internal/organic growth. These places are indulging in "nation building", are desirous of western standards, and have increasingly rapid per capita income growth.
Nickel remains in better shape in 2006 than it ever was in 2005, as this time last year inventories were rising steadily and drawdowns had dwindled to a mere trickle. The stainless steel market was also faced with surplus metal and going into 2006 the picture was not good.
However, in tight markets it takes very little to turn them - one way or the other - as we have recently learned.
I believe too many folk want the exuberance of base metals to continue almost unimpeded. That's plain silly. I am bullish on nickel, but see a platform in the $17,000/$18,000 range as more desirable now than a figure over $20,000.
Markets need time to pass on cost increases. If the costs can't be passed on because they come too soon after previous price increases, the market collapses back on itself.
A little patience and a decent period of consolidation is needed for nickel to maintain ground over $20,000 in the months ahead.
LONDON (Reuters) - Nickel gained 2.1 percent in London after Phelps Dodge announced a $40 billion buyout for two Canadian miners on Monday, suggesting that the company believes metals prices will stay high in the longer term, analysts said.
Phelps Dodge said it would acquire Inco and Falconbridge in a deal to form the world's largest nickel and second largest copper producer.
"From the price they are prepared to pay, you have to infer that Phelps Dodge believe that (metals) prices will stay strong. It's the only way they can justify these sorts of numbers," a London mining analyst said.
markrmau
8th-July-2006, 04:52 PM
Nickel's rate of drawdown will be sending alarm bells through the metals market: There is no doubt that it is the "metal for the moment" rather than for the year.
Looks like you're right here. Spot Ni is almost 10% above the may 'bubble' now. Who knows where it will end?
YOUNG_TRADER
11th-July-2006, 11:07 AM
Amazing spots being acheived!
I am curious though as to other peoples views,
On the one hand while I see the lack of Supply as a support for Nickel, I note that stock piles have actually increased somewhat since they hit that dangerously low 7kt level last year, could it be that is the funds driving it based on speculation? ? ?
To make it a little clearer, its just Nickel Stocks are not at say 5 yr lows, yet only now are their prices at record highs, so does that mean fund speculation now exagerating the supply side risks or is it a new shift, ie an acceptance that Nickel Inventories won't reach acceptable levels for some time to come? ? ? ? ? ?
michael_selway
11th-July-2006, 12:26 PM
Amazing spots being acheived!
I am curious though as to other peoples views,
On the one hand while I see the lack of Supply as a support for Nickel, I note that stock piles have actually increased somewhat since they hit that dangerously low 7kt level last year, could it be that is the funds driving it based on speculation? ? ?
To make it a little clearer, its just Nickel Stocks are not at say 5 yr lows, yet only now are their prices at record highs, so does that mean fund speculation now exagerating the supply side risks or is it a new shift, ie an acceptance that Nickel Inventories won't reach acceptable levels for some time to come? ? ? ? ? ?
Yeah i agree, certainly some speculation in the Nickel Price atm, and additionals to live warrants usually come in pretty thick and fast
One has to be becareful when chasing "breakouts"
Nickel Price Pullback A Possibility
FN Arena News - July 10 2006
By Greg Peel
It is the nature of the great Chinese production explosion that it constantly runs ahead of itself. Producers are falling over themselves to tap into the economic dream, and the banks have no qualms in handing out the money. Such it is that stainless steel production becomes unnecessarily excessive.
The Chinese thus face a problem of oversupply of stainless steel. This then has ramifications across Europe and other stainless steel producing areas. But nickel, a major ingredient in stainless steel, is in tight supply. Hence the nickel cost is outweighing the economics of stainless steel sales.
What to do? The best thing is to cut production of stainless steel for the time being. This will allow nickel stocks to rebuild and stainless steel stocks to run down. The price of the former should fall and the latter should rise and then everyone can get back to business. At least, that is, until it happens all over again.
And so it has come to pass. The three biggest Chinese stainless steel producers have agreed to cut output this month by 20%. Exactly the same thing happened in the second half of last year. When it did, the nickel price fell 35%.
Merrill Lynch points out that last year Nickel stocks rose 600% from 5kt to 37kt between June and January. Given the factories close for the summer hols anyway, it was just a matter of extended leave.
Merrills is not advocating a nickel price catastrophe. However, with nickel hitting an all-time high of US$11.29/lb, there is clear downside risk.
Nickel stocks have reached pretty much exactly the same point (less than 7kt) as last year. If the script is followed, a price fall looks likely. UBS, however, is currently suggesting that both nickel and zinc look very strong for the rest of the year, with low nickel inventories cited as the reason for bullishness.
It is unclear whether UBS wrote its report before or after the Chinese production cut announcement.
Merrills is also bullish, in the longer term, as it expects deficits to continue for the next two years.
thx
MS
rederob
11th-July-2006, 05:27 PM
Nickel in the immediate term is likely to do a "copper" - ie, keep rising despite being seriously overbought.
I targeted a $25k price but suspect even $27k is possible on an intraday spike before a sharp pullback, and it will be very sharp.
Remember, nickel is over 70% in the month to date so we are stretching the rubber band extremely tightly at the moment.
For newcomers to base metals, we should be in a relatively quiet trading period at the moment, being the northern summer - traders don't need to restock until holidays are over and it's "business as usual" (from later in August).
The fact that nickel drawdowns are running at near record levels and cancelled warrant ratios have been consistently over 30% for weeks (presently almost 50%) suggests there simply is no spare metal around.
If there was spare metal, cancellations would dry up: They have actually gathered pace with nickel prices at all time contract highs.
In fundamental terms we are facing a near term supply squeeze and the technicals have been concurrently supporting the metal's price.
Although I expect an extremely sharp pullback in the next week or so, I presently foresee no reason why nickel will not return to record prices levels once the speculators have been shaken out and consumers are forced to re-enter the market to obtain scarce materials.
Anyone trying to compare nickel prices with nickel equities will notice that the equities have already factored in the pullback.
So when the pullback does occur and equity prices have bottomed, a great trading opportunity will present itself.
rederob
11th-July-2006, 10:36 PM
The maths:
One tonne equals 2,204 pounds
So below price a little while ago from Kitco placed nickel at a touch over $26,500/tonne:
YOUNG_TRADER
11th-July-2006, 10:39 PM
Nickel Advances in London for a 10th Day as Stockpiles Shrink
July 11 (Bloomberg) -- Nickel gained for a 10th consecutive day in London as stockpiles of the metal that's mostly used to make stainless steel dropped.
Inventories of nickel monitored by the London Metal Exchange fell 486 metric tons, or 5.5 percent, to 8,418 tons today. Stocks have declined 76 percent this year to the lowest since Aug. 23. Credit Suisse Group said last month in a report that nickel demand in 2006 will beat production by 15,000 tons.
``The fundamentals are pretty good, certainly for nickel,'' said Robin Bhar, a London-based analyst at UBS Ltd. ``There's fear that the market doesn't have enough stocks.''
Nickel for delivery in three months on the LME rose $600, or 2.4 percent, to $25,250 a ton as of 11:13 a.m. local time, the highest since at least 1987. The metal has gained 87 percent this year.
Nickel prices gained as strengthening demand, led by surging production of stainless steel in China, exceeds supply, Beijing Antaike Information Development Co., which advises the Chinese government on industry policies, said July 7.
Chinese stainless steel production will rise more than 25 percent to 4.7 million tons this year, boosting demand for nickel by 35,000 tons, or half the projected increase in global demand, Antaike analyst Xu Aidong said in an interview. Global nickel use may rise to 1.33 million tons this year from 1.26 million tons last year, she said.
Copper also rose on the LME, gaining $133 to $7,888 a ton, helped by falling inventories and speculation that global supply may be disrupted by a threatened strike at Escondida, the world's biggest mine for the metal in Chile.
Inventory Drops
The ``lack of inventory is on the bullish side,'' said John Kemp, a London-based analyst at Sempra Metals.
Lead added $30 to $1,110, tin advanced $100 to $8,825, zinc gained $65 to $3,570 and aluminum rose $35 to $2,600.
Alcoa Inc., the world's biggest aluminum maker, said yesterday second-quarter profit surged 62 percent to a record $744 million on higher prices and demand.
Aluminum prices at Alcoa's smelters rose 38 percent on average in the quarter as demand rose from makers of aircraft, building materials and drink cans. Aluminum production rose 1.7 percent to 882,000 tons from the first quarter as Alcoa's expanded Alumar smelter in Sao Luis, Brazil, started production in March. The smelter will boost output by about 50,000 metric tons this year, Alcoa has said.
Alcoa is also investing in smelters outside the U.S., including in Iceland, because Chief Executive Officer Alain Belda expects worldwide aluminum demand to double by 2020. By then,
``China continues to be short,'' said Belda. ``They will be short aluminum and alumina for the year, and I think it will be in that condition through 2006, 2007, probably 2008, also.''
The average price of aluminum on the LME rose 50 percent from a year earlier and reached a 19-year high of $3,310 a ton in May.
And it looks like good ol George Bush is adding to the Supply Side constraints
Bush plan targets Cuban nickel
ALAN FREEMAN
Globe and Mail Update
WASHINGTON — The Bush administration vowed Monday to crack down on nickel exports from Cuba, at least half of which are accounted for by Canada's Sherritt International Corp., alleging that the money from the sales is being “diverted to maintain the regime's repressive security apparatus.”
But Sherritt's chairman, Ian Delaney, immediately labelled the proposed actions as “nothing new” and said that the continuing U.S. embargo on the Communist nation is simply “nonsense.”
Nickel recorded new record highs on the London Metal Exchange (LME) on Tuesday, supported by critically low stocks, and copper also rose, underpinned by threats to supply and strong sentiment towards metals.
"The metals all look pretty steady, with nickel and copper at the top end of their range, well supported by strong demand," an LME trader said.
"Nickel saw another stock draw and the metal is certainly in demand, giving it more room to easily go higher," he added.
LME nickel touched a new peak of $25 250 per ton after closing at $24 650 on Monday.
By 1027 GMT nickel was indicated at $25 100.
Stocks in LME warehouses fell again on Tuesday, down by 486 tons to 8 418, their lowest since August 2005, which was reflected in the premium for cash nickel over the three-months price widening to $1 900. On May 11 it was at $475.
Demand looked strong with Chinese stainless steel mills, major users of nickel, boosting production, traders said.
"In the short term expect the metals to continue to erode overhead supply, which should lead to further strength in the days ahead," William Adams at Basemetals.com said in a report.
On the supply side, the Nonoc mine in the Philippines, with capacity to produce 41 000 tons of nickel annually, might be revived by 2008 under a new debt accord arranged by China's Jinchuan Group Ltd., the Philippine government and mine owner Philinico Industrial Corp.
rederob
11th-July-2006, 10:48 PM
But wait, there's more (leaving LME warehouses every minute!)
Below is table of LME exchange warehouse movements of nickel:
michael_selway
11th-July-2006, 11:44 PM
But wait, there's more (leaving LME warehouses every minute!)
Below is table of LME exchange warehouse movements of nickel:
Hehe maybe we should ring up our superfunds to buy the remaining "on warrants"
Btw do u know what the lowerst LME supply ever recorded for Nickel was and when?
thx
MS
YOUNG_TRADER
12th-July-2006, 12:30 AM
OMG up almost 8%, reached a peak of $12.25, currently at $12.19
Clear example of listening to what the market is telling you, rather than listening to analysts who gab on about metal substitution and stainless plants cutting production etc.
The market is telling us that there isn't enough nickel supply to meet demand. Simple as that.
YOUNG_TRADER
12th-July-2006, 10:44 AM
Agree Mark, but I'm a bit more cautious last year when Chinese Steel Mills reduced steel output in the second half we saw a huge increase in Nickel Stocks huge!!!!! From like 6,000t's to 36,000t's in 6 months, so I am far more cautious of Nickel as it has in the past been far more volatile,
Good news I wouldn't expect the price to drop below $20,000 t which is excellent news for all Nickel Companies
michael_selway
12th-July-2006, 11:17 AM
The market is telling us that there isn't enough nickel supply to meet demand. Simple as that.
Thsi is quite misleading
The most important thing is the true underlying and future demand and supply for Nickel
Is Nickel In A Bubble?
FN Arena News - July 12 2006
By Greg Peel
On Monday FN Arena brought news that China's three biggest stainless steel producers were planning to cut production by 20% in the northern summer due to a high nickel price having wiped out margins. They did this last year, and the nickel price fell 35%.
Nickel has stolen the limelight away from copper and zinc, having been the outstanding performer in the second quarter and kicking off the third in a similar vein. The price is now well above the previous May high, and the correction is all but forgotten.
Is it a bubble? Will it end in tears? Certainly the Chinese factor could well weigh on speculative sentiment. But then it hasn't yet.
The LME nickel price rose 45% in the second quarter and a further 18% this month. From January 1, the nickel price has risen 117% compared to copper's 109% and 77% for the GSCI metals index.
Barclays Capital points out that the nickel price is clearly a reflection of ever-tightening fundamentals. LME stocks have diminished rapidly in 2006 and currently represent only about three days forward cover. There is real concern from producers that they simply won't get the nickel they need.
The stainless steel industry absorbs 70% of all nickel, and globally that industry is firing along. The US has successfully applied five price increases this year, notes Barclays. In Europe there is strong buying interest and longer and longer delivery times. It is only in Asia where momentum is slowing.
Barclays is not talking a price pullback. The analysts note that the nickel price is often considered a lead indicator for other metals, given its leverage to the steel industry. The LME inventories of copper and zinc are also rapidly declining and demand has not abated. Barclays infers that nickel could well drag the other metals up with it.
http://www.fnarena.com/images/news/nickel.jpg
thx
MS
porkpie324
12th-July-2006, 06:26 PM
young trader, a very good post you wrote today on nickel, it seems going by some of your posts on resource stocks u & i are watching similar miners,porkpie
YOUNG_TRADER
13th-July-2006, 12:13 AM
Cheers Porkpie!
Just got back from dinner, omg Nickel is at $27,500 + where will it stop? ? :eek:
This correction in Nickel is gonna be nasty :(
YOUNG_TRADER
13th-July-2006, 12:46 AM
Nickel Climbs for 11th Day as Stockpile Slump Curbs Supplies
July 12 (Bloomberg) -- Nickel rose for an 11th consecutive day in London as inventory declined, curbing supplies of the metal used to make stainless steel.
Stockpiles of nickel monitored by the London Metal Exchange fell 2.1 percent to 8,244 metric tons, the lowest since Aug. 22, the LME said today to a daily report. Inventory has dropped 78 percent this year. Stockpiled nickel may be needed by consumers to compensate for the production shortfall forecast for this year by some analysts.
``Supply concerns are back on the markets' minds for now,'' said Roy Carson, a London-based trader at Triland Metals Ltd., one of 11 companies trading on the floor of the LME. ``The psychology is quite bullish.''
Nickel for delivery in three months on the LME rose $450, or 1.8 percent, to $25,950 a metric ton at 9:47 a.m. London time. Earlier, the metal rose to $26,000, the highest since at least 1987. The metal has gained 91 percent this year.
``Nickel's out on its own,'' said Carson, who added that the metal could rise to between $27,000 and $28,000.
Credit Suisse Group said last month 2006 demand will outpace output by 15,000 tons. LME stockpiles are sufficient for three days of demand, Barclays Capital analysts led by Kevin Norrish said in a report yesterday.
``There are now very real concerns that many consumers will simply not get the nickel they require over the coming months,'' Barclays said.
Among other LME metals, copper gained $230 to $8,140, lead rose $20 to $1,130, zinc added $80 to $3,600 and aluminum advanced $20 to $2,628. Tin was unchanged at $8,900.
YOUNG_TRADER
13th-July-2006, 09:42 PM
SYDNEY, July 13 (Reuters) - High-flying nickel prices -- up 84 percent this year -- may be headed for a crash, taking the share prices of producers down in the process, research group Stock Resource said on Thursday.
Nickel traded on the London Metal Exchange <MNI3> has soared on bets by investors that supplies of the metal, whose widest use is as an alloy in stainless steel used to make beer kegs, will fall short of demand over the the next year or two.
But a view is emerging that high prices will turn some users in China and elsewhere away from nickel and other industrial metals, driving prices down.
"The spot nickel price is currently US$12.61/lb, ($27,805/tonne) a price we believe is unsustainable and will lead to demand destruction," Stock Resources said in a client report.
"While the price increase is driven by the market's perception of a higher-than-forecast nickel deficit for 2006 and the entry of speculators, the price is likely to fall as a reality check emerges over what prices the industry can really bear," it said.
"This is likely to drag down all nickel stocks irrespective of individual company merits," it said.
Driven by speculative buying first by hedge funds and now pension funds, which use commodities such as metals to diversify their portfolios, prices of nickel, copper and other metals have reached record highs this year.
But industrial buyers were now looking for ways to cut down their use of these expensive metals, analysts have said.
"We are ... well into the area where the use of metals as a financial instrument is doing real damage to the industries who use and produce these metals," David Humphreys, chief economist at Russian mining giant Norilsk, told a Reuters forum on the industry.
However, others say demand for nickel is likely to remain strong, with consumption in fast-industrialising China, already lapping up much of the world's nickel, seen growing by 19 percent a year for at least the rest of the decade.
Nickel inventories held by the London Metal Exchange have dwindled to 8,244 tonnes, representing less than three days of global consumption.
Several big mining projects, including Inco Ltd. (N.TO: Quote, Profile, Research) of Canada's Goro mine and Falconbridge Ltd.'s (FAL.TO: Quote, Profile, Research) Koniambo mine, both in nickel-rich New Caledonia, are still under development.
Consumption of nickel should rise 4 percent to 1.39 million tonnes this year, according to the Australian Bureau of Agricultural and Resource Economics.
Australia mines about 200,000 tonnes of nickel annually, mostly from outback lodes. Diversified miner BHP Billiton Ltd./Plc. (BHP.AX: Quote, Profile, Research)(BLT.L: Quote, Profile, Research) is the country's biggest supplier and is spending about $1.8 billion digging a new mine in far western Australia yielding 50,000 tonnes a year.
Ahead of a retreating nickel price, Stock Research said it would "cash in its remaining chips" in Australian nickel miner Mincor Resources N.L. (MCR.AX: Quote, Profile, Research), whose stock is up 84 percent this year to A$1.18 in tandem with nickel prices.
Fellow mid-sized miner Jubilee Mining Ltd. (JBM.AX: Quote, Profile, Research) is up 20 percent this year to A$9.00, while Sally Malay Mining Ltd.'s (SMY.AX: Quote, Profile, Research) shares have almost doubled to A$1.37. ($1=A$1.33)
michael_selway
13th-July-2006, 10:56 PM
Nickel its crazy atm, but yeah unsustainble one would think.
Sometime in the next 6 months or so, i think it might happen for Zinc as well.
Macquarie ups nickel, copper, iron ore price forecasts
Source: Dow Jones
See also
Nickel Board
Nickel CatalogMacquarie Research Wednesday issued upgrades to its price forecasts for copper, nickel and iron ore, as well as lifting profit expectations for major miners including BHP Billiton (BHP) and Rio Tinto plc. (RTP).
Macquarie lifted its forecast for average nickel prices this year by 14.7% to US$8.45 a pound after the stainless steel ingredient's recent surge to all-time high levels on shrinking global stocks.
Macquarie also increased its copper price forecast for 2006 by 16.7% to US$2.96 a pound.
While the upgraded forecasts for base metal prices are still below current London Metal Exchange levels, Macquarie's upgraded iron ore prices for 2007 represent an increase on 2006 levels.
The investment bank now forecasts iron ore fine prices at 82.63 cents a ton for 2007, up 12.5% on its previous call and from this year's 73.45 cents, with lump prices set to rise to US$1.05 next year from this year's 93.7 cents.
However, Macquarie still expects prices of most commodities to ease back over the next three years from current high levels as markets come back into balance.
"We remain positive on the near-term outlook for commodity markets, although we view 2006 and 2007 (in some cases) as the peak of the current commodity price cycle and see supply growth gradually catching up and overtaking demand growth," it said.
The less bearish commodity view translates to earnings upgrades for several major mining companies.
Against a backdrop of tight global nickel and copper markets, Macquarie lifted its profit expectation for Inco Ltd (N.TO) by 36% this year, 49% next year and 100% in 2008.
Similarly the bank lifted its earnings expectations for Phelps Dodge Corp (PD) by 28%, 15%, 3% over the next three years respectively. It upwardly revised BHP Billiton's three-year profit forecasts by 2%, 5% and 6% and Rio Tinto's by 8%, 7% and 7%.
The positive earnings momentum for miners is expected to remain supportive of share price performance in the near-term, Macquarie said.
"Those companies with exposure to our preferred base metals of nickel and copper continue to benefit most while the fundamentals for the bulk commodity markets of iron ore and thermal coal continue to exceed earlier expectations.
It retained a preference for large diversified miners such as BHP Billiton, Rio Tinto, Companhia Vale do Rio Doce (RIO), Xstrata plc (XTA.LN) and Teck Cominco Ltd (TCKb.TO) given their ability to absorb ongoing cost pressures and delays expected at both the operating and development level.
However, it also underlined the attractiveness of selected leveraged plays such as Norilsk, Inco and Jubilee Mines NL (JBM.AU) in nickel; Phelps Dodge in copper and Kagara Zinc Ltd (KZL.AU) in copper and zinc; Lihir Gold Ltd (LHG) and Oceana Gold Ltd (OGD.AU) for gold exposure; and Iluka Resources Ltd (ILU.AU) in the mineral sands.
thx
MS
porkpie324
14th-July-2006, 11:02 AM
so, there we have it all, the last 2 posts, one expert says nickel is to crash another expert is supporting a rise. I have just checked the depth of market for mcr there is great support around the $1.10 area over half million shares on the buy side. But as i said a few days ago we're in bluesky territory now for many nickel miners, so it gets back to fundermentals, the forecasts for many miners is on lower nickel prices anyway, so i'm looking to buy in again on weakness. porkpie
michael_selway
14th-July-2006, 10:59 PM
so, there we have it all, the last 2 posts, one expert says nickel is to crash another expert is supporting a rise. I have just checked the depth of market for mcr there is great support around the $1.10 area over half million shares on the buy side. But as i said a few days ago we're in bluesky territory now for many nickel miners, so it gets back to fundermentals, the forecasts for many miners is on lower nickel prices anyway, so i'm looking to buy in again on weakness. porkpie
MS
More recent inventory data is tabled below.
Within the fortnight nickel stocks may run out, given the present rate of drawdown and cancellation.
The key to this trend is sustained cancellations.
In May 2005 when inventory was equally as critical, resupply was robust and cancellations had dried up: Neither of these latter factors are currently at play.
Despite these high nickel prices, it does appear Oz equity markets are already factoring in a sharp retrace.
michael_selway
15th-July-2006, 02:24 AM
MS
More recent inventory data is tabled below.
Within the fortnight nickel stocks may run out, given the present rate of drawdown and cancellation.
The key to this trend is sustained cancellations.
In May 2005 when inventory was equally as critical, resupply was robust and cancellations had dried up: Neither of these latter factors are currently at play.
Despite these high nickel prices, it does appear Oz equity markets are already factoring in a sharp retrace.
Thanks for thr data
i dont know but i think more so who is buying the inventory and why at such high prices and such rapidnes? speculators? but who?
thx
MS
Kipp
15th-July-2006, 08:30 AM
Thanks for thr data
i dont know but i think more so who is buying the inventory and why at such high prices and such rapidnes? speculators? but who?
thx
MS
If you were a fund manager or bank who had a massive stake in a Nickel producer... don't you think you would try and add to the shortage by buying 1000 tonnes of so of what is already a pissy stockpile?
27mill outlay would be peanuts if you were holding a $300 mill of SMY, MCR Phelps dodge shares etc (granted that is dificult when MCR has a market cap of ~220mil)...
Then you start selling them offwhen the shares were at all time highs, and then sell off your Ni stockpiles and short th market...
No idea if any of this is possible... but if I had 500 mill I'd think about it...
rederob
15th-July-2006, 09:24 AM
Thanks for thr data
i dont know but i think more so who is buying the inventory and why at such high prices and such rapidnes? speculators? but who?
thx
MS
MS
Speculators should now be sidelined from nickel, or will suffer heavy losses.
At this point one would have to conclude the buyers are mostly consumers of nickel - they need the nickel to keep their (stainless) steel production facilities running.
This deduction is based on the wide geographic spread of drawdowns and ongoing cancellations.
Moreover,the data consistency tells us that the pace is not slow.
Expect a ridiculously high price spike soon as short sellers feel the pinch of being caught naked and will pay any price to avoid the ignominy.
rederob
15th-July-2006, 09:32 AM
If you were a fund manager or bank who had a massive stake in a Nickel producer... don't you think you would try and add to the shortage by buying 1000 tonnes of so of what is already a pissy stockpile?
27mill outlay would be peanuts if you were holding a $300 mill of SMY, MCR Phelps dodge shares etc (granted that is dificult when MCR has a market cap of ~220mil)...
Then you start selling them offwhen the shares were at all time highs, and then sell off your Ni stockpiles and short th market...
No idea if any of this is possible... but if I had 500 mill I'd think about it...
Sorry Kipp, I was elsewhere and missed your intervening post.
Imagine this.
You are vastly wealthy and do as you say above, ie "short the market".
The risk is not having metal to sell if the contract buyer calls for delivery.
Lo and behold, it's now August and there is no LME metal available, at all, anywhere.
Your buyer wants to take delivery.
Over to you Kipp, for an answer..........
What are you willing to pay, and to whom?
What will default cost you?
michael_selway
15th-July-2006, 12:32 PM
MS
Speculators should now be sidelined from nickel, or will suffer heavy losses.
At this point one would have to conclude the buyers are mostly consumers of nickel - they need the nickel to keep their (stainless) steel production facilities running.
This deduction is based on the wide geographic spread of drawdowns and ongoing cancellations.
Moreover,the data consistency tells us that the pace is not slow.
Expect a ridiculously high price spike soon as short sellers feel the pinch of being caught naked and will pay any price to avoid the ignominy.
hm main thing is underlyign demand and supply, and future U-D & S
http://www.basemetals.com/stocks.aspx
ive noticed theres a consistent 'Ins" added to On warrants as well, so thsi means its not tight at all? so some non consumer is just trying to buy up from LME?
Another thing if DOW continues to go down like on Friday but basemetals goes up, do you thing aussie resource stocks will go up or down?
Sorry Kipp, I was elsewhere and missed your intervening post.
Imagine this.
You are vastly wealthy and do as you say above, ie "short the market".
The risk is not having metal to sell if the contract buyer calls for delivery.
Lo and behold, it's now August and there is no LME metal available, at all, anywhere.
Your buyer wants to take delivery.
Over to you Kipp, for an answer..........
What are you willing to pay, and to whom?
What will default cost you?
Me and my investment conglomerate just sank $27mill into 1000t Nickel (see LME) now look at Ni rocket up another 60c/lb...
Rob I don't doubt your knowlegde over mine, you called the shots on Ni LME prices very well over the past few months... all I'm suggesting is that the entire Nickel stockpiles could be bought out for a pretty small pile of money (in investment banking terms) so it would be easy to corner the market via speculation...
michael_selway
19th-July-2006, 11:36 PM
Me and my investment conglomerate just sank $27mill into 1000t Nickel (see LME) now look at Ni rocket up another 60c/lb...
Rob I don't doubt your knowlegde over mine, you called the shots on Ni LME prices very well over the past few months... all I'm suggesting is that the entire Nickel stockpiles could be bought out for a pretty small pile of money (in investment banking terms) so it would be easy to corner the market via speculation...
You have to be careful of the "in", additions to On Warrants
Look how much is coming in now, 700k tonnes! this week alot came in
Underlying Demand/Supply may be in surplus thats why
thx
MS
rederob
19th-July-2006, 11:43 PM
You have to be careful of the "in", additions to On Warrants
MS
Did you not subscribe to the link?
You have posted data a day old.
810 tonnes cancelled overnight leaving the ratio of cancelled to total nickel at LME at an astonishing 60%.
Expect more fireworks in coming days as drawdowns will be hefty and it is not likely that restocking levels have a chance of meeting demand.
$30k here we come!
michael_selway
20th-July-2006, 08:49 AM
MS
Did you not subscribe to the link?
You have posted data a day old.
810 tonnes cancelled overnight leaving the ratio of cancelled to total nickel at LME at an astonishing 60%.
Expect more fireworks in coming days as drawdowns will be hefty and it is not likely that restocking levels have a chance of meeting demand.
$30k here we come!
Relying fully on Cancelled figures is not 100% accurate of the underlying demand/supply as there could be "fake" buying
Thats why you also need to look at "Ins" Addition to On Warrants as well
Yeah have subscribed but they only send u the info once a day?
thx
MS
michael_selway
9th-August-2006, 12:52 PM
MS
Did you not subscribe to the link?
You have posted data a day old.
810 tonnes cancelled overnight leaving the ratio of cancelled to total nickel at LME at an astonishing 60%.
Expect more fireworks in coming days as drawdowns will be hefty and it is not likely that restocking levels have a chance of meeting demand.
$30k here we come!
Hi thx, MI daily newsletter is very nice indeed, but they have a week off this week?
Btw alot of "ins" for nickel, copper, and aluminium, is this a bearish sign u think? or just once off?
thx
MS
rederob
9th-August-2006, 03:40 PM
Btw alot of "ins" for nickel, copper, and aluminium, is this a bearish sign u think? or just once off?
thx
MS
MS
We should expect this to continue for a few more weeks, then get a rebound in demand as the northern summer slumber comes to an end.
Look for some bargains in coming weeks.
Makavel
9th-August-2006, 06:58 PM
Ni
Cu
PGE
but nickel for sure the consumption by china etc. will continue to be huge for many years espically with the olympics etc. and general populations growth and demand.
Michael
rederob
9th-August-2006, 10:09 PM
Ni
Cu
PGE
but nickel for sure the consumption by china etc. will continue to be huge for many years espically with the olympics etc. and general populations growth and demand.
Michael
Michael
The "supercycle theory" has not been put to bed yet.
That is, almost 3 years into the commodity bull cyle we remain a whisker off all time highs for many off the base metals.
The ongoing transfer of wealth from West to East dictates that the former have nots will be into consumerism at an increasing rate, including car ownership.
I don't know if "keeping up with the Wong family" in China or the Kim family in Korea is in vogue in Asia. But if it is, expect commodity prices to stay high well into the future.
Remember that Japan's post WWII industrialisation involved only 100 million people in a very small nation. China is a ten times bigger proposition in a country much larger than Australia!
Then toss India into the equation.
We are witnessing a slow changing of the "economic guard".
Within 10 years my view is that the US will be economically subservient to China at almost every level of economic production. Individually Chinese people are not likely to be as wealthy as Americans, but then again they will not be carrying the incredible personal debt of Americans, either.
For this reason, I have a strong leaning to MRE as a nickel play in our local market - 40 years of nickel reserves and continuous improvements to their production capacity (which has been relatively poor in recent years).
Makavel
9th-August-2006, 11:37 PM
fair enough i didnt know this was based on MRE. But sure china will become the super power due to alot of large corporate organisations moving facilities etc. offshore.
but the demand will still grow with economies of scale and their demand for commodities as a whole.
rederob
10th-August-2006, 06:48 AM
fair enough i didnt know this was based on MRE. But sure china will become the super power due to alot of large corporate organisations moving facilities etc. offshore.
but the demand will still grow with economies of scale and their demand for commodities as a whole.
Michael
Minara (MRE) is just one of the nickel stock I like - nothing more or less.
It has world clas nickel reserves, but a nickel plant that also has world class problems to resolve to reach nameplate capacity.
My point was that having 40 years of reserves gave it the capacity to rise steadily in price if the supercycle theory is proven true.
kennas
14th-August-2006, 09:22 AM
2305 GMT [Dow Jones] Nickel pure-plays Minara (MRE.AU), Mincor (MCR.AU), Jubilee (JBM.AU), Sally Malay (SMY.AU), Western Areas (WSA.AU) likely to outperform broader mining eqities market as metal touches record high Friday, while copper, other metals lose ground. Weekend reports South Korean steelmaker Posco scrambling to cover 10,000-ton LME short, compounded by 20,000-ton physical short may send prices on run back into uncharted territory. Posco news adds to reports CVRD (RIO) entered Inco (N) takeover fray, while strike continues in Voisey's Bay mine Canada. (JAD)
michael_selway
15th-August-2006, 07:00 PM
Michael
Minara (MRE) is just one of the nickel stock I like - nothing more or less.
It has world clas nickel reserves, but a nickel plant that also has world class problems to resolve to reach nameplate capacity.
My point was that having 40 years of reserves gave it the capacity to rise steadily in price if the supercycle theory is proven true.
Mystery investor bets on nickel fall
By Chris Flood
Published: August 14 2006 21:06 | Last updated: August 14 2006 21:06
Mystery on Monday continued to surround the identity of a participant who has built up a big position on the London Metal Exchange, betting that nickel prices will fall.
The LME’s latest update showed that one participant or group holds 30 to 40 per cent of the short nickel positions on the exchange.
The position appears to have been built up since mid-July, as there was no single player or group holding 5 to 10 per cent of the LME short positions on July 17. The LME does not disclose the identity of participants who have taken long or short positions. It does not disclose the extent of the overall short positions.
Posco, the South Korean steel producer, denied a report that it is struggling to cover a 10,000 tonne short nickel position on the LME and an additional 20,000 tonne position on the physical market.
Posco said that the short position on the LME was less than 1,000 tonnes and that the company did not have any short positions on the physical market.
“Posco is not a speculator. The company’s demand for nickel is only 70,000 to 80,000 tonnes a year. Such a large short position is nonsense considering the company’s real demand for nickel,” a spokesperson told Reuters.
Analysts were also sceptical. “LME prices should have soared if Posco has to cover a large short position,” said Kim Yung-joong, analyst at Samsung Securities. “I think Posco does not have such a large short position. Also the losses from less than 1,000 tonnes of short position would not seriously hurt Posco.”
Three-month nickel prices soared to a record $27,300 a tonne last week, supported by a strike at Inco’s Voisey Bay mine in Canada and a fall in global inventories to critical levels, less than one day’s worth of world consumption. London Metal Exchange inventories rose by 126 tonnes to 5,814 tonnes on Monday. Cancelled warrants stand at 60.5 per cent of nickel stocks. Nickel for delivery in three months rose 2 per cent to $27,150 a tonne.
Posco consumed 90,000 tonnes of nickel last year and is trying to cut usage. It has also announced plans to invest $352m in two nickel projects with Société Minière du Sud Pacifique to cut raw material costs.
Posco shares closed 0.4 per cent higher at Won233,000 on Monday.
While nickel demand is set to grow healthily for the rest of the decade, strengthened by strong Chinese stainless steel output, there is a string of projects expected to come on stream.
Copyright The Financial Times Limited 2006
thx
MS
rederob
16th-August-2006, 10:50 PM
The odd fool tipped nickel to hit $30k this year, but they really were not too bright.
Until tonight.
Nickel didn't hit resistance at $30k at all: Just smashed through to sit a shade under $31k
michael_selway
16th-August-2006, 11:27 PM
The odd fool tipped nickel to hit $30k this year, but they really were not too bright.
Until tonight.
Nickel didn't hit resistance at $30k at all: Just smashed through to sit a shade under $31k
At what price do you think its a short if any (or how high do u think it can go)?
thx
MS
rederob
17th-August-2006, 07:04 AM
At what price do you think its a short if any (or how high do u think it can go)?
thx
MS
MS
With nickel we are in the land of the loonies at LME and a price spike to $50k is not out of the question.
However, the spikes are not indicative of the broader market as they are just covering short positions to the extent that is possible.
That said, LME acted overnight to protect the shorts, although the ongoing risks to position holders remain, and the financial penalties per tonne are significant as each "lot' of traded nickel is 6 tonnes:
16/08/2006
LME Imposes Backwardation Limit for Nickel
At 1700 hours today, The London Metal Exchange (LME) announced that the Special Committee has imposed a backwardation limit of $300.00 per tonne per day in the nickel market and that there will be a suspension of the Lending Guidance in respect of those with nickel positions.
After taking account of all the relevant factors, and following consultation with LCH.Clearnet, the Special Committee has resolved that:
1. Backwardation limit
Those with short positions in nickel falling prompt on Friday 18 August 2006, and on subsequent prompt dates until further notice, who are unable to effect physical delivery and/or unable to borrow metal at a backwardation of no more than $300.00 per tonne per day, shall be able to defer delivery for a day at a penalty of $300.00 per tonne. Those with long positions for prompt on those days who are subject to deferred delivery shall be entitled to compensation of $300.00 per tonne per day
michael_selway
17th-August-2006, 11:00 PM
MS
With nickel we are in the land of the loonies at LME and a price spike to $50k is not out of the question.
However, the spikes are not indicative of the broader market as they are just covering short positions to the extent that is possible.
That said, LME acted overnight to protect the shorts, although the ongoing risks to position holders remain, and the financial penalties per tonne are significant as each "lot' of traded nickel is 6 tonnes:
LME intervenes in nickel market
By Chris Flood in London
Published: August 16 2006 21:40 | Last updated: August 16 2006 21:40
The London Metal Exchange, the world’s biggest base metals exchange, was forced to make an extraordinary intervention in the nickel market on Wednesday to head off the risk of defaults on trades by speculators as the metal soared to a record high.
The three-month nickel price surged to its biggest one-day rise since January 2004, leaping 6.4 per cent to a record $29,200 (£15,300) a tonne amid what one analyst called “panic” covering of short positions, where traders bet on a fall in the metal’s price.
Dealers believe the metal could now breach $30,000 a tonne, because global inventories of nickel have shrunk to less than one day’s worth of world consumption. The cash price of nickel soared 14.2 per cent to $33,350 a tonne a on Wednesday.
Although London Metal Exchange nickel inventories rose 354 tonnes to 6,162 tonnes, the amount of metal actually available to the market is just 1,374 tonnes, since a large proportion of the stockpile is earmarked for delivery. That compares with annual production of about 1m tonnes.
The LME said that to preserve orderly trade, it would permit traders with “short” positions, betting on price falls, to defer settlement of their trades.
Given the tightness of supplies, the exchange also offered some leeway to traders with a short position. It said that from Friday, anyone with a short position who was unable to make physical delivery could postpone delivery at a cost of $300 a tonne per day – equivalent to about 1 per cent of current market prices.
The LME imposed a limit in the spread between nickel cash and futures prices of $300 per tonne per day. It also suspended rules that require some traders with big long positions – those betting on rising prices – to lend metal to short-sellers who need to settle trades.
Simon Heale, chief executive of the LME, said: “Nickel stocks are at historically low levels and we now have a genuine material shortage. Our first priority is to ensure that trading remains orderly and to prevent the risk of settlement defaults.”
Robin Bahr of UBS said there was “extreme tightness” in the nickel market that suggested “shorts have become trapped and are desperately trying to cover their positions”. Nickel prices have doubled this year.
http://img74.imageshack.us/img74/3748/lmemt1.jpg
On Warrant is virtually gone, but "ins" are still frequent
thx
MS
scsl
17th-August-2006, 11:04 PM
:eek: i have no shares in nickel companies but the recent run in the nickel price has definately caught my attention...
if i wanted to have a closer look at some nickel stocks, which companies do you suggest i start off with? perhaps companies that are or will be producing soon, have majority of operations in nickel so i can effectively buy into the rising price of nickel.
cheers,
scsl
michael_selway
17th-August-2006, 11:38 PM
:eek: i have no shares in nickel companies but the recent run in the nickel price has definately caught my attention...
if i wanted to have a closer look at some nickel stocks, which companies do you suggest i start off with? perhaps companies that are or will be producing soon, have majority of operations in nickel so i can effectively buy into the rising price of nickel.
cheers,
scsl
Nickel producers i knwo of
JBM, MCR, SMY. IGO, MRE, ARH
thx
MS
rederob
18th-August-2006, 06:55 AM
On Warrant is virtually gone, but "ins" are still frequent
thx
MS
MS
A function of the market is to induce restocking - your "ins" - via higher backwardation, which occurs when inventory rundowns are evident.
We are there with nickel, and I suspect other base metals will face similar issues before Xmas.
An important point to remember is that high prices are now sustainable for much longer irrespective of the "ins". Consumers will need to restock and build production reserves. However, to get to this point will require the bottom to fall out of global markets (ie meltdown), or for consumers to go offline and rest their production facilities until there is a stockbuild.
If the latter were to occur, we simply get a dominoing effect until demand is curtailed: Because order books at present are booked solid.
rederob
18th-August-2006, 09:57 PM
LME headline nickel stocks rose slightly today, but in reality it masked a 378 tonne reduction in "available" metal, bringing total open warranted stocks to a mere 870 tonnes.
Some 5k tonnes are primed to leave warehouses in the next few weeks, so the headline figure is set to fall sharply.
Expect $30k nickel prices to hold for a while, with most surprises to the upside near term.
michael_selway
18th-August-2006, 10:53 PM
LME headline nickel stocks rose slightly today, but in reality it masked a 378 tonne reduction in "available" metal, bringing total open warranted stocks to a mere 870 tonnes.
Some 5k tonnes are primed to leave warehouses in the next few weeks, so the headline figure is set to fall sharply.
Expect $30k nickel prices to hold for a while, with most surprises to the upside near term.
omg its low 870 left, one would think someone is "playing" with it on LME
"ins" are still frequent
thx
MS
Freeballinginawetsuit
19th-August-2006, 12:58 AM
SMY is an excellent nickel stock (nice resource and fundamentals), charting to just about run and I reckon it will go past $ 1.40 this time.
Freeballinginawetsuit
19th-August-2006, 01:02 AM
Nickel producers i knwo of
JBM, MCR, SMY. IGO, MRE, ARH
thx
MS
LOL at ARH, they don't have any nickel producing mine. In fact they don't have any mine except ramped ASX announcements. You can make money on there stock though, a traders dream on 3 occasions in the last 2 months.
rederob
19th-August-2006, 01:08 PM
omg its low 870 left, one would think someone is "playing" with it on LME
"ins" are still frequent
thx
MS
MS
"ins" should be going throught the roof as to deliver to spot will give you over $4,000 more per tonne than delivering on a 3 month forward contract.
Instead, a meagre inflow overnight.
LME had hoped the backwardation would draw enough metal in to quell immediate demand.
Yet "cancellations" account for over 85% of available metal.
I had wondered why more metal had not left warehouses this week, as the "out" side activity has been incredibly low by recent standards.
My suspicions is that the dominant longs are squeezing the shorts who, rather than default, are instead suffering $300/day/tonne losses in the hope they can physically get hold of some metal to deliver in order to close out their position.
Some time ago, I think in this thread, someone asked why a big player just didn't come along and buy all the available nickel. The reaon is because the metal "appears" available, but in reality may already be spoken for by more than one or two players - dominant longs who intend to take delivery within 3 months but have yet to close their positions (or cancel their warranted metal).
The risk in a tight market is that their may not be any metal to deliver, any metal at all. We may be seeeing history in the making as post-summer demand has yet to rear its head. When it does, I expect others will fall.
YOUNG_TRADER
22nd-August-2006, 10:36 PM
Amazing, simply amazing,
I guess it should have been Nickel the metal for 2006
Zinc the metal for 2007 :banghead:
michael_selway
23rd-August-2006, 12:27 AM
Amazing, simply amazing,
I guess it should have been Nickel the metal for 2006
Zinc the metal for 2007 :banghead:
0438 GMT [Dow Jones] LME 3-month nickel sitting at new all-time high of $30,000/ton having extended 5% surge overnight on low stocks, supply-side interruption, and as speculators continue to squeeze shorts; "while the market believes there are uncovered short positions out there, it will continue to drive prices higher," says Tricom metals trading head Jonathan Barratt. Eventually, however, nickel faces "violent crash" given unsustainably steep gains, likelihood record prices will crimp demand, flush out new supply. (JAD)
Tread carefully friends.
nioka
23rd-August-2006, 06:14 PM
:eek: i have no shares in nickel companies but the recent run in the nickel price has definately caught my attention...
if i wanted to have a closer look at some nickel stocks, which companies do you suggest i start off with? perhaps companies that are or will be producing soon, have majority of operations in nickel so i can effectively buy into the rising price of nickel.
cheers,
scsl
Why not look at THX who have nickel which will soon be mined by SMY and they have other interests ? They are very kind to me at this stage.
rederob
23rd-August-2006, 06:22 PM
0438 GMT [Dow Jones] Eventually, however, nickel faces "violent crash" given unsustainably steep gains, likelihood record prices will crimp demand, flush out new supply. (JAD)
Tread carefully friends.
Agreed.
Except that if you look at equity prices v's nickel you will note a disparity.
Equities have already tailed off in anticipation.
I think nickel will drop below $20k quite quickly (after the bubble bursts), but probably consolidate around that level unless supply rebounds strongly.
In the interim, benchmark LME prices will guarantee that producers will reap in this quarter the highest returns received in a generation. And these profits will feed into bottom line profits.
Accordingly, I anticipate nickel producers will be re-rated by analysts and this is likely to feed into "accumulation" and higher equity prices in months to come.
michael_selway
23rd-August-2006, 06:28 PM
Agreed.
Except that if you look at equity prices v's nickel you will note a disparity.
Equities have already tailed off in anticipation.
I think nickel will drop below $20k quite quickly (after the bubble bursts), but probably consolidate around that level unless supply rebounds strongly.
In the interim, benchmark LME prices will guarantee that producers will reap in this quarter the highest returns received in a generation. And these profits will feed into bottom line profits.
Accordingly, I anticipate nickel producers will be re-rated by analysts and this is likely to feed into "accumulation" and higher equity prices in months to come.
See the thing is, brokers/analysts never value a stock based one 1 years return, not matter how good it is. Thats why Mine Life is important
This quarter they earn heaps more, but what about average for the year? what about next year? and the next? are there any risks?
These issues will used to value these companies etc
thx
MS
rederob
23rd-August-2006, 08:48 PM
See the thing is, brokers/analysts never value a stock based one 1 years return, not matter how good it is. Thats why Mine Life is important
This quarter they earn heaps more, but what about average for the year? what about next year? and the next? are there any risks?
These issues will used to value these companies etc
thx
MS
I read what analysts say, but I do my own research.
I usually am buying when most others are selling.
In terms of nickel mine life, I think Minara has the best reserves in Australia, and possibly in the world - another 40+ years at present rates
brerwallabi
3rd-September-2006, 10:15 AM
I am sticking backing nickel, great article below.
Nickel Bull Market
Scott Wright September 1, 2006 2713 Words
Today’s powerful commodities bull market has been host to a myriad of commodities enjoying varying degrees of success as the greater secular trend marches higher. Base metals though have been in a league of their own in the last twelve months. The workhorses of this bull, precious metals and energy, have even taken to the crowd of recent in order to witness the march of the industrial metals.
As is apparent to astute observers, the global economy has kicked into high gear the last half decade or so. And base metals serve as key ingredients that lay the structural foundation of this global build out. Led by Asia’s voracious appetite for the natural resources that are required for such undertakings, global warehoused stocks of the critical metals necessary for this growth have been devoured.
Mixed with a dollop of speculative fervor, simple economic fundamentals have been the true drivers of this global resources pinch. Demand for the metals that feed this build out has paced well ahead of supply in recent years causing inventories to dwindle and forcing the producers that bring the metals to market to scramble to keep up.
The major base metals that have driven this amazing rally in the last twelve months are aluminum, copper, zinc, nickel and lead. Though these metals are not precious, have no store of value and are still known to have vast untapped resources, their innumerable industrial uses are absolutely invaluable and when a supply imbalance occurs, their commoditized nature can take the markets by storm.
To give you an idea of how base metals have performed so far in this bull market, below are their bull-to-date and 2006 peak gains. And in order to give perspective to the wild ride these metals have been on, I’ve included the same performance data for the precious metals.
Precious Metals:
Silver +272%, +65%
Platinum +221%, +36%
Gold +181%, +36%
Base Metals:
Nickel +629%, +138%
Copper +575%, +88%
Zinc +450%, +109%
Lead +263%, +32%
Aluminum +145%, +39%
The right-side 2006 gains reveal how these metals have done from the beginning of the year to their recent peak. For the majority of these metals the low point for the year took place on this year’s first trading day, but it should be noted that lead is the exception as it took a pounding in the second quarter and fell well below its beginning-of-the-year price. It is definitely the weakest of the base metals in 2006, but lead’s resilience this quarter has driven it back above its beginning-of-the-year starting point.
As you can see not only in the bull-to-date gains but in the 2006 gains, base metals have rocked the commodities world. Copper is typically the most talked about of the base metals among the mainstream gabbers as its amazing gains partially tell the story of its fast-growing world demand. But copper is not the leader of this group as far as gains go. Have a look at nickel!
Nickel has had an incredible run early on in its own young bull market. From its low in late 2001 of $2.00 per pound, nickel has experienced little letup in its push to its very recent all-time high of $14.60. And nickel has been the talk of the town in global futures markets in the last month as it recently eclipsed the $30,000 per metric ton (1 metric ton = 2,205 pounds) mark for the first time in its 27 years trading on the London Metal Exchange! The 600%+ gain nickel has put up in just the last five years is typically unheard of in any trending market, but the fundamentals of this finite metal might call for it to push even higher as the great commodities bull of the 00’s charges forward.
So what makes this metal that the U.S. five-cent coin is named after so special? Well first it is interesting to note that a U.S. nickel is actually only comprised of 25% of its namesake with copper accounting for the balance.
Aside from its use in minting though which accounts for only a fraction of its global consumption, nickel has excellent fundamentals among many of its irreplaceable functions. Its main use is as an alloy in stainless steel which commands over two-thirds of its global demand. It is also heavily relied upon in various non-ferrous alloys, jet engines, manufacturing plant equipment, CD and DVD pressing and rechargeable batteries.
But as mentioned earlier, it is simple economics that ultimately explain nickel’s rise. Demand has continued to outstrip supply. Just last week Charles Goodyear, CEO of top global miner BHP Billiton, reiterated the strong fundamentals that base metals, in particular nickel, should continue to exhibit. As the world’s third largest nickel producer, BHP has a good pulse on the market for this metal and foresees 2006 global nickel production coming in over 20,000 metric tons short of expectations.
Mr. Goodyear cites “disruptions in the current market environment” as one of many reasons for the current high base metals prices and expected production shortfalls. Mr. Goodyear goes on to explain, “there is a limited availability of resources to tap into to bring more metal into a very tight market, and there are lengthy regulatory processes to go through to bring resources into production … the machines and people needed to exploit these resources are also in high demand and difficult to secure … the disruptive factors come from weather, exhausted machinery in an industry operating at full capacity for three years and industrial action by unionized workers pushing for higher wages.”
Mr. Goodyear does an excellent job outlining the essence of this base metals bull and many of the underlying factors driving its core strategic strengths. And nickel in particular has been pushed to its recent heights partially due to its rarity as compared to the other major base metals.
As measured by volume, the mined nickel brought to market each year is significantly less than the other major base metals. Aluminum has the highest volume with over 31 million metric tons mined annually, more than twice as much as copper which is the next closest. Nickel ranks at the bottom of these major base metals with mined volume half that of lead measured at 1.5 million metric tons in 2005.
But interestingly, nickel production has not been lagging over the years. In 1994 there was less than 1 million metric tons of nickel extracted from the earth and each subsequent year the volume has incrementally increased. But shockingly a 66% increase in global nickel production over the last twelve years has still come short of fully meeting demand.
According to the U.S. Geological Survey, since 1950 stainless steel production in the Western world has been growing at an average rate of 6% per year. And with Chinese demand continuing to skyrocket since the turn of the century it is no wonder record 2005 mine production still fell short of demand.
Even the conservative International Nickel Study Group estimates there could be a nickel shortfall of over 6,000 metric tons in the first half of this year as other sources cite even more of a spread. As hinted at earlier, the result of this strong nickel demand has led to global warehoused stocks being pilfered down to alarmingly low levels.
This year alone the LME has seen its warehoused nickel supply plunge by a staggering 83% with recent reports showing current supply of less than 7,000 metric tons. This is the equivalent of less than two days worth of global nickel consumption and goes a long way in explaining why speculators and consumers alike are worried about future nickel supplies.
This first chart dissects nickel’s current young bull market, but it is nickel’s recent breathtaking ascent that has us talking about it today. Since November 1, 2005, just ten short months, nickel has climbed a near-parabolic 179% to jaw-dropping levels. Where it will balance and consolidate from here is anybody’s guess, but at worst I believe this recent drive is psychologically preparing consumers to view $8.00 nickel as an acceptable and possibly even cheap baseline.
The first thing you may discover in looking at nickel’s bull run is that this recent parabolicesque upleg was not its first. Toward the end of 2003 nickel exited its orderly ascent and carved its first parabola rocketing 130% higher in just six months.
Nickel was not the only metal to experience this late 2003 price surge and I believe this was the result of what I like to call the China Effect. During these waning months in 2003 speculators finally got a good grasp of the current and future impact China was having on the base metals markets and painted a bullish fundamental picture going forward hence sharply driving up the prices.
But as with all parabolic surges, regardless of the driving factors, there are consequences investors and speculators must bear as euphoria gets out of hand. As is apparent all throughout market history, in order to balance sentiment corrections are necessary even in bull markets. And in early 2004 nickel bled 41% after its parabola reached its apex.
Thankfully in secular bull markets corrections usually do not fully give up the ghosts of their previous uplegs. And since commodities bulls are not driven by concept but rather economic fundamentals, the greater strategic uptrend will grind higher achieving higher highs and higher lows until a sustainable balance for these finite resources can be achieved. So corrections in these types of markets have nary a symmetrical look as compared with their previous uplegs.
brerwallabi
3rd-September-2006, 10:17 AM
Second Part of article.
With this in mind, nickel provides a prime example of a unique characteristic base metals have shown as their prices thrust higher. Unlike gold or gold stocks, where uplegs are typically followed by corrections that lead to consolidations well below their apex, base metals tend to consolidate in a flag pattern near their top until they are ready to charge forward once again.
After nickel’s early 2004 correction it continued in an uptrend that developed a new support zone just about in line with where its original support was before the parabola. This uptrend though remained inside of a greater trend channel that confined nickel in a sideways consolidation that lasted for over two years. Nickel climbed to just over $8.00 per pound at the apex of this first parabola, and remained in a sideways grind that saw it bounce between $5.00 and $8.00 until it finally broke out in April of this year to achieve a fresh high.
And this latest powerful upleg in nickel is something to behold. It even makes the other base metals look like underperformers! On May 11, the base metals finally looked like they had reached the apex of their second powerful upleg. Since this time, aluminum, copper, zinc and lead have been in a sideways consolidation just below their May 11 peak. But as you can see in this next chart, nickel has taken on a life of its own separating itself from the base metals herd.
As the other base metals have appeared to settle into an orderly post-upleg consolidation after their May tops and initial sharp corrections of -24%, -26%, -31% and -25% for copper, zinc, lead and aluminum respectively, nickel chose to take a different path. After a quick -19% nine-trading-day breather from its initial May double top, nickel has proceeded to march higher. And higher and higher, continuing to shatter its own highs bringing us to the levels we see today.
Though I hardly think nickel can maintain these levels and gains without at least some sort of temporary crash, correction or consolidation, why the deviation from its counterparts?
Other than overly thinning global inventory, there is no single event that can be isolated as the catalyst for this move. It’s not like any of the top global nickel mines sunk into the earth’s crust or nickel itself became the only accepted global currency overnight. But with today’s solid nickel fundamentals as detailed above, there may not need to be a scientific explanation for its recent performance.
And as a speculator witnessing nickel’s awe-inspiring price action, the opportunities that arise from this have me chomping at the bit. This nickel and in general base metals bull market has made futures traders betting in the right direction barrels of money. But what is still not widely known is that the average investor can take part in this powerful bull by acquiring the stocks of the explorers and producers that are charged with bringing these popular base metals to market.
Most producing nickel mines today were brought into production with their nickel metal being economically feasible at market prices of under $3.00 per pound. If five years ago you’d have told any seasoned nickel professional that $8.00 per pound nickel is perhaps a cheap and acceptable norm with prices even shooting past the $10.00 level, they’d have strung you up for being stricken with irrational exuberance. For this reason, nickel miners that are leveraged to its market price are able to score incredible profits as their cash costs remain low.
Even if nickel corrects down to its levels before this recent surge, those miners that are currently producing or developing the nickel mines of the future are likely to greatly capitalize from a secular bull market in their underlying metal. And with metals prices currently hovering around record highs, current producer companies are continuing to yield record profits for their shareholders.
In the same fashion that gold and silver stocks caught their bid as the precious metals took off, base metals stocks have incredible potential going forward. But unlike gold and silver stocks, most base metals stocks still exhibit obscenely low valuations and are ripe for the picking. Even Mr. Goodyear echoes the fundamental sentiment of this base metals bull claiming that resource companies are currently trading at bear-market multiples.
Even though many base metals stocks have enjoyed good initial run ups in this young bull market, they still lie in relatively undiscovered territory for most investors and speculators. As the word gets out that base metals stocks are still cheap, capital should flood into them eventually driving their values to appropriate bull market levels greatly rewarding those prudent ones that were in the door first. With this in mind, we’ve been researching base metals stocks all summer wading through the hundreds that are out there on a quest to discover the best fundamental plays.
We have just published another of our comprehensive research reports that identifies our favorite 20 base metals stocks. These reports contain detailed fundamental discussions on the individual stocks we believe have a high potential for success in various sectors within the commodities bull market. Included in this base metals stocks report are not only a handful of very promising and undervalued nickel plays, but those companies that focus on copper, zinc, lead and molybdenum among the many base metals.
The stocks highlighted in this report range from small-cap junior explorers to major producers. This inside look at our research provides a sample of what we deem the best of the best base metals stocks ultimately designed to support future base metals stock trades for our newsletter subscribers.
The technical buy and sell decisions are timed and discussed within our newsletters based on current market conditions among many factors. But the ongoing stock research for each sector is too detailed and extensive to cover within our newsletters, which is why we publish our research reports. If you are interested in getting an inside look into our favorite base metals stocks, please purchase our latest report today.
The bottom line is nickel is indeed one of today’s hottest commodities. As this metal’s global imbalance works to correct itself, prices should continue to stay high for many more years. With this, the suppliers that are bringing nickel to market now and in the future are positioned to achieve vast profits.
And investors and speculators wishing to take part in this excellent bull market not only in nickel but in any of the base metals can multiply their capital through the elite companies that discover and extract the various metals from the earth. Base metals stocks are still cheap, and a continued bull market in these metals should drive them considerably higher.
johnmwu3
3rd-September-2006, 11:44 AM
Nice Article !
I know China will have another stainless steel line to be built in Guandong province( South China), about 1.5 million tons per year.
China now to limit common carbon steel production, but lift stainless steel production.
To say the truth, China got no enough stainless products to be used, especially in high grade quality, and high quality stainless steel will use more Nickle in it, most people think the base metal boom will last to 2010.
Any suggestion ?
canaussieuck
3rd-September-2006, 03:21 PM
Infrastructure development in China will certainly drive metals pricing...Zinc is the one that i feel (like many others) will outperform others. Nickel too i feel will continue to be in strong demand.
Iron ore demand will decrease as China becomes a net exporter.
chicken
4th-September-2006, 10:44 PM
Infrastructure development in China will certainly drive metals pricing...Zinc is the one that i feel (like many others) will outperform others. Nickel too i feel will continue to be in strong demand.
Iron ore demand will decrease as China becomes a net exporter.
I got into AGM....make your research.......bought 200k at 30cents....going into production at end of year....SP will be rerated....brokers have 60cents as value....comments
savtin
4th-September-2006, 11:50 PM
Chicken,
I have been with AGM for several years, waiting for the market to wake up to its value......it is still very cheap at these prices and you are very lucky to be able to buy in at that price.....1 year from now the SP will be in the dollar range.............that is if it is not taken over...........a VERY REAL POSSIBILITY......great assets. Their reserves thus far are tip of the ice berg stuff.
cheers
savtin
chicken
5th-September-2006, 09:32 AM
Chicken,
I have been with AGM for several years, waiting for the market to wake up to its value......it is still very cheap at these prices and you are very lucky to be able to buy in at that price.....1 year from now the SP will be in the dollar range.............that is if it is not taken over...........a VERY REAL POSSIBILITY......great assets. Their reserves thus far are tip of the ice berg stuff.
cheers
savtin
You are right most undervalued SP ...As soon as production starts look out this SP will be in the $1 range...not long now ...read what was said as production will commence earlier in the 2007 year....good find....got a swag of them :2twocents
rederob
5th-September-2006, 06:22 PM
You are right most undervalued SP ...As soon as production starts look out this SP will be in the $1 range...not long now ...read what was said as production will commence earlier in the 2007 year....good find....got a swag of them :2twocents
Now now chicken
Allegiance hope to find someone to process ore prior to 3rd quarter 2007.
If they do, that would be excellent, although is still about 6 months away.
I agree the company has significant value, and should reward long term holders handsomely over time.
However, like many companies that are yet to achieve cash flow, there is likely to be an opportunity to pick up AGS quite cheaply again once the inevitable nickel price correction occurs.
I wish you and the other faithful holders many happy returns.
michael_selway
5th-September-2006, 06:49 PM
However, like many companies that are yet to achieve cash flow, there is likely to be an opportunity to pick up AGS quite cheaply again once the inevitable nickel price correction occurs.
Rederob what do u think of this? Strong Speculation = fake buying?
Nickel shortage? Not according to France’s Eramet Metals Insider - 8 September 2006
Not everyone is convinced that the recent liquidity squeeze on the London Metal Exchange—a direct function of historically low stock levels—was a reflection of the global market’s supply-demand dynamics. French producer Eramet warned in its H1 results released yesterday that “the physical market should be close to equilibrium in 2006, which could mean a return by nickel prices to lower levels at any time.” It attributes the recent surge in prices over July and August to “strong speculation”. This is in fact a repeat of what the company has already said several times in the last couple of months and it’s worth emphasising that Eramet’s is something of a minority view among nickel market analysts and producers. Canadian producer Inco has said it expects the market to record a deficit of 30,000t this year, while the World Bureau of Metal Statistics has estimated it recorded a 38,000t deficit in the first six months alone, although this is right at the top end of assessments to the best of our knowledge.
Now now chicken
Allegiance hope to find someone to process ore prior to 3rd quarter 2007.
If they do, that would be excellent, although is still about 6 months away.
I agree the company has significant value, and should reward long term holders handsomely over time.
However, like many companies that are yet to achieve cash flow, there is likely to be an opportunity to pick up AGS quite cheaply again once the inevitable nickel price correction occurs.
I wish you and the other faithful holders many happy returns.
AGM or AGS?
Allegience Mining and Alliance Resources; I think Chicken was talking about AGM.
rederob
9th-September-2006, 07:47 AM
Rederob what do u think of this? Strong Speculation = fake buying?
MS
MS
Speculation is not "fake buying".
Speculative buying on the LME is taking a risk, by entering a long or short position, without the intention of taking delivery.
Most markets have speculators very active in them, and most speculation nowadays seems to be the domain of hedge funds.
Those that buy on the LME will either quit their position, take delivery, or default.
I have snipped an article on default from a Bloomberg article last year:
"Investors use so-called credit-default swaps to insure debt payments or bet on credit quality. Demand surged this week for swaps protecting payments by General Motors Corp. 'Risk concentration remains high,' said Ian Linnell at Fitch in London. 'In the event that there was a major default, for instance General Motors, and then one of the major dealers also defaulted, the market would be in major trouble.'"
"Credit-default swaps are the fastest growing part of the $270 trillion derivatives market, based on the so-called notional value of the debts that underlie the contracts, according to the Bank for International Settlements. The default swaps market worldwide jumped 60 percent to $10.2 trillion in the first half of 2005, the BIS said in a report yesterday."
"In a credit-default swap, the buyer pays an annual premium to guard against a borrower's failing to pay its debts. In the event of default, the buyer gets paid the full amount insured, and hands over defaulted loans or bonds to the swap seller. Swap prices typically decline when creditworthiness improves, and rise when it worsens."
In relation to nickel's "ins", it is a pleasing sign.
I am never keen about overheated markets as they favour active traders over more passive investors.
It will be interesting to see in the pace of "ins" is maintained next week.
My suspicion is that Norilsk has milked the present high backwardation dry and will run to a more orderly delivery regime over coming weeks.
An interesting feature of LME's cancelled nickel warrants equation is the lack of drawdown. It suggests to me that consumers panicked recently and shored up their supplies in advance of production restarts. If that was indeed the case, then a bout of heavy nickel buying is not too far off. Consumers just can't afford to hold high inventories when prices are running at double their budgeted levels.
On the price side of nickel, note that there has been a rather orderly decline from recent highs, rather than a massive selldown as fear gripped an overbought market. This seems to be a function of market tightness.
My view is that the market is as likely to reclaim highs as it is to continue to the downside. Probability-wise the downside price trend is highly likely to continue in the immediate term.
Nickel has not really had a chance to consolidate in its recent record breaking run, so I hope for the sake of price stability we can find a range nearby where it can sit comfortably for a few weeks.
rederob
9th-September-2006, 08:00 AM
AGM or AGS?
Allegience Mining and Alliance Resources; I think Chicken was talking about AGM.
Moses
Apologies.
Although my comments were based on Allegiance, I do believe I pulled down a chart of Alliance (uranium/gold/copper) when making the comment about entry price.
chicken
9th-October-2006, 03:30 PM
I got into AGM....make your research.......bought 200k at 30cents....going into production at end of year....SP will be rerated....brokers have 60cents as value....comments
You are right I am talking about AGM.....starting NOV2006 production in 4 weeks..they are using or working with someone for till their own plant is installed as fas as AGS...that is a Uranium play..have bought and sold a few times....AGM..thats where I hold over 200k shares...looking better everyday...capper still buying....see 32cents at present....but when we see production starting...PRICE per share?......I bought ....LOLO :2twocents
mlennox
10th-October-2006, 09:05 AM
Bloomberg reports nickel hits new record high in early trading today. Forbes reports $13.73/lb for 3 month ($30,250/tonne) was hit earlier today. The $30,000/tonne barrier had been breeched for the first time in history on Aug 24th of this year.
chicken
10th-October-2006, 03:17 PM
Bloomberg reports nickel hits new record high in early trading today. Forbes reports $13.73/lb for 3 month ($30,250/tonne) was hit earlier today. The $30,000/tonne barrier had been breeched for the first time in history on Aug 24th of this year.
Check out AGM...their latest news....production to start..mine ready in Tasmania..all ready to roll..see their presentation today in Sydney...Mining conference...at 33cents...what more can I say..bought more today... :2twocents
Seneca60BC
22nd-October-2006, 07:28 PM
The nine-month world nickel price average is $9.69 this year, the
highest ever recorded for the alloying and plating metal. If the
Barclays Capital forecast of $14.29 for the fourth quarter is accurate,
the full-year average would be $10.84. But that outlook is somewhat on
the high side. Several other analysts are looking at a full-year 2006
average in a range of $9.50-$10. In either case, the price outlook
reflects the global surge in demand caused by robust stainless and
specialty steelmaking and a supply tightness caused by several strikes.
Looking ahead, there's no consensus yet on 2007 pricing. Morgan Stanley
analyst Wiktor Bielski is forecasting the London Metal Exchange average
spot price will increase to $10.75/lb. However, Australian Bureau of
Agricultural and Resource Economics, that nation's official forecaster,
is projecting $8.57/lb. Earlier, Sydney-based Westpac Banking projected
a 2007 average of just $6.50
<http://www.purchasing.com/article/CA6368995.html?display=readersChoice>
while J.P. Morgan's commodities desk is forecasting $6.70.
link (http://www.purchasing.com/article/A6379941.html?title=Article&spacedesc=news&nid=2520)
rederob
22nd-October-2006, 11:15 PM
Seneca
ABARE is a wonderful organisation, with talented forecasters.
You should read their past 4 year's worth of metals forecasts.
If they were on performance bonuses, they wouldn't have a nickel to their name.
nizar
23rd-October-2006, 06:14 AM
Seneca
ABARE is a wonderful organisation, with talented forecasters.
You should read their past 4 year's worth of metals forecasts.
If they were on performance bonuses, they wouldn't have a nickel to their name.
LOL I second that!
Seneca60BC
23rd-October-2006, 08:16 AM
LOL I second that!
LOL cool.
tour
2nd-November-2006, 12:08 PM
hi.
it seems that almost all interest is now into zinc. im still a big nickel fan, and i still hold their stocks. i was just wondering how would you see the price of nickel will be in the next couple of years? i noticed that nickel is steadily incresing but its still small. there is certainly plenty of junior explorers and mid-size capanies already starting production and thats only in australia. will you see supply or demand to be substainable in the futre? as you see im investing for growth, and there sre many stocks that has potential but will take time to flourished.
thxs
stoxclimber
2nd-November-2006, 07:06 PM
wow! Nickel prices down 8.46% on the LME!
What happened?
No news on Kitco yet..
kennas
2nd-November-2006, 07:12 PM
wow! Nickel prices down 8.46% on the LME!
What happened?
No news on Kitco yet..
Holy Cow, that's gotta b an error. None of these go down that much in minutes.
Sodapop
2nd-November-2006, 07:38 PM
Yeah - the stockpile figure hasn't been updated either by the looks... wait and see... shot-term blip even if bona fide (i hope)...
Fab
2nd-November-2006, 08:03 PM
OOps if that is correct this is not good for auz ?
Can you provide a link to where you get this LME update from .
Cheers
stoxclimber
2nd-November-2006, 08:13 PM
fab: from www.kitcometals.com
I don't think theres another site out there with live prices to cross check...
scsl
2nd-November-2006, 10:45 PM
It's now down 8.16%. Perhaps it's no mistake...
stoxclimber
3rd-November-2006, 01:32 AM
"recovered" now to be down about 2.5%...who knows? maybe it was just a mistake after all
chops_a_must
22nd-November-2006, 01:30 AM
I'm tipping Palladium as my metal for 2007. I'd say platinum is going to run, which will also push up rhodium, and possibly even Palladium. Although I think Palladium will be the bigger % gainer, Platinum stocks will be the winner next year. Lets see if I'm right, lol.
andrewkmz
25th-November-2006, 11:07 AM
Nickel price increased 4.22% to 15.48 US$/lb last night.
"Nickel soared to a 19-year high amid supply fears after a French court ordered Inco Ltd. to halt construction on part of its massive Goro nickel project in New Caledonia due to environmental concerns."
more details: http://www.kitcometals.com/
Is the turn for Nickel?
I think csm (Consolidated Minerals Limited) can benefit from this, any other stocks or thoughts?
michael_selway
25th-November-2006, 11:46 AM
Nickel price increased 4.22% to 15.48 US$/lb last night.
"Nickel soared to a 19-year high amid supply fears after a French court ordered Inco Ltd. to halt construction on part of its massive Goro nickel project in New Caledonia due to environmental concerns."
more details: http://www.kitcometals.com/
Is the turn for Nickel?
I think csm (Consolidated Minerals Limited) can benefit from this, any other stocks or thoughts?
why CSM?
JBM, MRE, MCR, IGO, SMY
thx
MS
redandgreen
25th-November-2006, 12:21 PM
I guess that CSM is probably the only nickel play atm that hasn't benefited materially from the soaring nickel price. Maybe because they are a bunch of incompetents and Titan may turn out to be a dud.....
CSM I suppose represents value and potential SP gain???
That's the reason I continue to hold! :2twocents
andrewkmz
25th-November-2006, 12:26 PM
Thx MS,
I picked the CSM because their sp is at low atm, while others' sp are their historical high. CSM are going to produce 6000 t nickle this year and increase to 15000 t in next 5 years. Last year their Nickel Revenue was 51.8 m, Giving nickle price more than doubled this year, the nickle revenue can be easily over 100 m.
Thanks for other nickle players name, I will have a study through.
AZ
nizar
25th-November-2006, 01:28 PM
why CSM?
JBM, MRE, MCR, IGO, SMY
thx
MS
AUZ?
Freeballinginawetsuit
25th-November-2006, 01:29 PM
Nickel price increased 4.22% to 15.48 US$/lb last night.
"Nickel soared to a 19-year high amid supply fears after a French court ordered Inco Ltd. to halt construction on part of its massive Goro nickel project in New Caledonia due to environmental concerns."
more details: http://www.kitcometals.com/
Is the turn for Nickel?
I think csm (Consolidated Minerals Limited) can benefit from this, any other stocks or thoughts?
Agreed MS, forget about CSM, market confidence is crap and they continue to deliver poorly in the curent marketplace considering their assets. I bought a few the other day but more as a hold ATM.
The lagger of the Nicklers as of Yesterday was MCR.
Take a look a close look at MCR. they are low cost/overheads (utilize BHP's proceess plant at Kambalda), just moved into in-house mining rather than contracted, deliver on exploration plays and relatively low hedging( 26% if memory is correct). MCR's management seems on the ball.
Friday a week back at pre-open, was the time to re-enter or top up youre Nickle/Zinc holdings . Perfect opportunity missed by probably the majority on ASF, again!. :2twocents
chops_a_must
25th-November-2006, 01:36 PM
Agreed MS, forget about CSM, market confidence is crap and they continue to deliver poorly in the curent marketplace considering their assets. I bought a few the other day but more as a hold ATM.
The lagger of the Nicklers as of Yesterday was MCR.
Take a look a close look at MCR. they are low cost/overheads (utilize BHP's proceess plant at Kambalda), just moved into in-house mining rather than contracted, deliver on exploration plays and relatively low hedging( 26% if memory is correct). MCR's management seems on the ball.
Yup, totally agree. Managed to pick up a bargain after an insto dumped them. Plus, they have some zinc exploration projects. I'm looking forward to seeing what these guys manage to do in the new year.
Fab
25th-November-2006, 01:43 PM
AUZ?
Yep I would have thought AUZ too but they are not moving much recently more consolidating
Caliente
25th-November-2006, 02:07 PM
hi, what are the thoughts on GME in this thread? Picked up a fair parcel on friday and wondering whether I've paid too much for its potential?
Halba
25th-November-2006, 02:52 PM
laterite very hard to mine...its sulphides the one the mkt is after
michael_selway
25th-November-2006, 03:34 PM
hi, what are the thoughts on GME in this thread? Picked up a fair parcel on friday and wondering whether I've paid too much for its potential?
hm bought it after the spike!?
thx
MS
michael_selway
3rd-December-2006, 11:22 PM
http://metalsplace.com/metalsnews/?a=8827
Goldman Sachs Group Inc., the most profitable investment bank in Wall Street history, increased its 2007 forecasts for nickel, zinc and platinum prices, saying supplies are "tighter." The bank also rated Xstrata Plc a "best buy idea."
Prices of nickel, used in stainless steel, will average $25,000 a metric ton next year, Goldman Sachs analysts led by Peter Mallin-Jones in London wrote in a report dated yesterday. That's a 33 percent increase from the previous estimate.
"Stainless-steel related demand for nickel has likely played a significant role in depleting nickel inventories this year," the analysts said. Supplies will lag behind demand by 20,000 tons this year, and the deficit will persist to next year, they said.
A strike at Eramet SA's Doniambo unit in New Caledonia, the world's largest ferronickel plant, has contributed to declining supplies as deliveries have dropped 8.5 percent since the strike started on Sept. 25, New York-based Goldman Sachs said.
Prices will average $17,750 a ton in 2008, before dropping to $15,000 tons in 2009, the bank said.
Shares of Xstrata, which acquired Canadian nickel producer Falconbridge Ltd. in September, are "underpriced," Goldman Sachs said. The Falconbridge acquisition has transformed Zug, Switzerland-based Xstrata into a global diversified miner and offers "the most potential upside" among the stocks the analysts covered, the bank said.
The analysts raised their share-price target for Xstrata 40 percent to 3,165 pence. Xstrata shares have gained 93 percent in the past year and were at 2,341 pence as of 10:12 a.m. in London.
The $17 billion purchase of Falconbridge, the world's fourth-largest nickel producer by 2005 output, also helped Xstrata to be the world's fourth-largest copper producer.
Zinc, Platinum
Goldman Sachs increased its zinc-price forecast 49 percent, saying the metal will average $4,298 a ton, peaking in the first quarter when prices are expected to average $4,520 a ton.
"Demand for galvanized steel looks strong currently, driving strong demand for zinc metal," the analysts said. Zinc is mostly used to galvanize steel. Prices will average $3,323 a ton in 2008 and $1,900 a ton in the following year.
The bank kept its 2007 forecasts for copper and aluminium unchanged at $5,875 a ton and $2,425 a ton, respectively. Aluminium will be in a surplus of 125,000 tons next year on rising production of alumina, the raw material used to produce the metal. Copper's oversupply is projected to be 230,000 tons next year, the analyst said.
The platinum market is also tighter than what the analysts previously expected, they said. Prices will average $1,225 an ounce next year, 11 percent higher than the previous estimate. Prices will average $1,085 an ounce in 2008 and $1,000 in 2009.
I just have a few questions. Even though they have revised forecasts for nickel and zinc upwards, wouldn't the prices for the metals actually have to come down to meet the averages they expect?
brerwallabi
4th-December-2006, 10:04 PM
Have you ever known any analysts to get it right.
They are so conservative, never known one to stick his neck out.
The majority is always happy with some small amount of growth above bank rates.
rederob
4th-December-2006, 10:28 PM
I just have a few questions. Even though they have revised forecasts for nickel and zinc upwards, wouldn't the prices for the metals actually have to come down to meet the averages they expect?
What a novel idea.
I wonder if they factored that scenario in!
chops_a_must
4th-December-2006, 10:41 PM
What a novel idea.
I wonder if they factored that scenario in!
I know you are taking the piss out of me. That's cool.
But their logic seems wrong. They are revising forecasts upwards based on fundamentals, yet, the current prices would have to drop based on the same fundamentals they are using to demonstrate a raise in forecasts.
patbarry
29th-December-2006, 01:41 PM
MS, how is it that LME supplies have no bearing on Nickel prices? In the Zinc thread, everyone is getting excited that LME stocks will deplete in Oct at current rate. Nickel will be depleted in 40 DAYS at the current rate. I don't get it...
nor do I really understand why the Ni boys have been punished while Gold and Zinc prices have fallen to hell (i.e. SMY and MCR) is it just gneral bearish sentiment?
The LME daily supply quote is misleading to the investor market - and it pays to understand what the market is doing.
Major suppliers like BHP/Western Mining will contract with major consumers (governments and major consortiums) - but there is a huge market that is served by broker/dealers selling to smaller manufacturers. Typically, the dealer will discuss an annual contract quantity with a rise and fall clause whereby the customer can elect to take more or less than the contracted amount. The dealer has to make a decision, since he wants to sell and not hold physical shipments, so he will commit to purchase his guaranteed commitments and plan to fill the overage in the spot market if the customer wants delivery of the full contracted amount.
Explained simply, if a dealer agrees with you to provide 1000 lbs of nickel a month, the contract will typically have a clause where the customer can adjust his acceptance by maybe 10% - meaning that he take only 900 lbs a month. So the dealer contracts with a mine to supply 900 lbs, not the 1000 lbs that the contract calls for.
Now the market is alive, and customers are saying that they want the full amount, and the dealer goes into the spot market to buy and satisfy the customer's requirement - but the spot market has moved way above the long term contract amount, so the dealer is in trouble and he has to pay the high price and take a loss to prevent default on the contract.
The result is an aberration - the spot market swells beyond comprehension, and yet the contracts are written at a long term price that is lower. However the investor market looks at the LME quote and thinks, Wow! The nickel market is $35,000 a tonne. Wrong! The marginal spot market, which is under pressure, is $35,000 a tonne yet the contracts that are renewing right now may not be written at this level.
I can say that I am looking at long term prices averaging US$12,000 a tonne, if this is helpful for any readers of this post. This is conservative and is below the long term present contract rate, but it won't take much of a decline to bring the spot market into equilibrium and bring the prices back down to some level.
rederob
29th-December-2006, 04:05 PM
patbarry
That's a great explanation of a segment of market pricing, which no doubt has an influence on prices across the board.
However, some nickel producers have offtake agreements that are benchmarked to spot prices, and others have a proportion of production hedged.
I guess the difficulty is working out when nickel prices - ie spot prices - will come off the boil. And then working out which companies are going to be most affected by a falling spot price.
My suspicion is that while the market remains tight, any longer term contracts that are up for renegotiation are going to lock in either higher prices, and/or improved price setting mechanisms.
Certainly, BHP have latched on to their ability to use their market power to completely revise copper pricing arrangements so that price participation is no longer a factor, while treatment and refining cost/charges better reflect economic production benchmarks rather than supply/demand per se.
What is certain is that forward future price curves for nickel are moving upwards and suggest that (at $24,000 for 27 month delivery) a figure of $12k/tonne would only be reached in the long term when commodity prices completely collapse.
michael_selway
30th-December-2006, 11:02 AM
The LME daily supply quote is misleading to the investor market - and it pays to understand what the market is doing.
Major suppliers like BHP/Western Mining will contract with major consumers (governments and major consortiums) - but there is a huge market that is served by broker/dealers selling to smaller manufacturers. Typically, the dealer will discuss an annual contract quantity with a rise and fall clause whereby the customer can elect to take more or less than the contracted amount. The dealer has to make a decision, since he wants to sell and not hold physical shipments, so he will commit to purchase his guaranteed commitments and plan to fill the overage in the spot market if the customer wants delivery of the full contracted amount.
Explained simply, if a dealer agrees with you to provide 1000 lbs of nickel a month, the contract will typically have a clause where the customer can adjust his acceptance by maybe 10% - meaning that he take only 900 lbs a month. So the dealer contracts with a mine to supply 900 lbs, not the 1000 lbs that the contract calls for.
Now the market is alive, and customers are saying that they want the full amount, and the dealer goes into the spot market to buy and satisfy the customer's requirement - but the spot market has moved way above the long term contract amount, so the dealer is in trouble and he has to pay the high price and take a loss to prevent default on the contract.
The result is an aberration - the spot market swells beyond comprehension, and yet the contracts are written at a long term price that is lower. However the investor market looks at the LME quote and thinks, Wow! The nickel market is $35,000 a tonne. Wrong! The marginal spot market, which is under pressure, is $35,000 a tonne yet the contracts that are renewing right now may not be written at this level.
I can say that I am looking at long term prices averaging US$12,000 a tonne, if this is helpful for any readers of this post. This is conservative and is below the long term present contract rate, but it won't take much of a decline to bring the spot market into equilibrium and bring the prices back down to some level.
Thanks Patbarry,
whats your veiw on Zinc?
thx
MS
Kauri
23rd-January-2007, 02:17 AM
Jan. 22 (Bloomberg) -- Nickel, the only gainer this year on the London Metal Exchange, pared an advance that sent prices to a record after owner of the metal on board a ship grounded off the southwest coast of England said the vessel carried less than 20 percent of the expected amount.
The MSC Napoli, which is being towed to Devon, England, carried 160 metric tons of nickel, Keith Dunleavy, managing director of London-based Stratton Metal Resources Ltd., said today in a phone interview. Stratton owns the metal on board. Reuters reported on Jan. 19 that the ship contained at least 1,000 tons.
``People were trying to boost prices,'' Dunleavy said today in a phone interview. Stratton learned the exact amount of the metal on board the container ship today, he said.
Nickel for delivery in three months gained $300, or 0.8 percent, to $36,500 a ton as of 12:46 p.m. in London. Earlier, the contract climbed to $37,300 a ton, beating Jan. 19's high by $1,000.
Nickel rose as much as 2.5 percent Jan. 19 on speculation 1,000 tons of metal wouldn't be saved, reducing supplies when inventories monitored by the LME are less than two days of global consumption.
Honest Sir, we didn't know we only had $6,000,000 of nickel on board, we thought it was $36,000,000 worth. :cool:
Dukey
24th-January-2007, 08:04 PM
These cheap card tricks that influence the market are a bit scary huh.
And of course there's no way to prove it wasn't a 'typo' or other innocent accident - so no-one will get bit by authorities.
The scary bit methinks is the possible scenario that one of these market manipulations could someday be 'the last straw' triggering a mahor sell-off etc. Is that possible? Or am I being overly paranoid.
:sly: :sly: :sly:
rederob
24th-January-2007, 08:48 PM
Nickel is up $10,000 since early January (2 weeks!!!) and still rising.
There will be a correction, and it will be savage.
Then there will be a retrace, and it will probably take out $40,000 again - possibly before the end of the quarter.
Support over $30k seems to be a given near term.
Rebuild on nickel inventories by consumers appears impossible in 2007 and may not even be achievable in 2008 if Goro and Ravensthorpe blow out.
chops_a_must
26th-January-2007, 01:42 PM
Nickel is up $10,000 since early January (2 weeks!!!) and still rising.
There will be a correction, and it will be savage.
Then there will be a retrace, and it will probably take out $40,000 again - possibly before the end of the quarter.
Support over $30k seems to be a given near term.
Rebuild on nickel inventories by consumers appears impossible in 2007 and may not even be achievable in 2008 if Goro and Ravensthorpe blow out.
As opposed to panic selling, there seems to have been panic buying. All based on a potential strike. Sure, the fundamentals probably support this price this year, but the speed of the price rise is worrying. All it's going to take is one bit of bad news and the price will come down very fast. The US housing data could just provide the sentiment to turn this price around.
BREND
26th-January-2007, 02:01 PM
As opposed to panic selling, there seems to have been panic buying. All based on a potential strike. Sure, the fundamentals probably support this price this year, but the speed of the price rise is worrying. All it's going to take is one bit of bad news and the price will come down very fast. The US housing data could just provide the sentiment to turn this price around.
Not only that, currently 1 US hedge fund holds more than 90% of nickel inventory at LME warehouse now.
chops_a_must
26th-January-2007, 02:15 PM
Not only that, currently 1 US hedge fund holds more than 90% of nickel inventory at LME warehouse now.
Ha! Serious? Have they started selling yet... or are they hoping to drive prices even higher? 'Cos when they do start selling, parachutes people. :run:
BREND
26th-January-2007, 02:31 PM
Ha! Serious? Have they started selling yet... or are they hoping to drive prices even higher? 'Cos when they do start selling, parachutes people. :run:
Yes serious, it is common for funds to dominate the metal market. Currently funds hold substantial amount of other metals inventory as well. I believe they are all prepared to create a massive metal rally when copper price rebounds.
joeljp
26th-January-2007, 11:17 PM
Not only that, currently 1 US hedge fund holds more than 90% of nickel inventory at LME warehouse now.
How I know? I'm a metal futures dealer, I have access to a bit more information than retail investors.
michael_selway
27th-January-2007, 07:46 AM
Not only that, currently 1 US hedge fund holds more than 90% of nickel inventory at LME warehouse now.
so the nickel market is being "played" atm?
thx
MS
joeljp
27th-January-2007, 09:17 AM
How I know? I'm a metal futures dealer, I have access to a bit more information than retail investors.
Brend, thanks for the information. I must have missed this particular article on Bloomberg.
Just so that I can understand it, the Nickel stockpile on LME is only around 5000 t (25/1/07), are you/they saying that 90% of this is held by one company or they hold a lot more than what's officially listed? If that's all they hold, 5000T isn't vey much at all. How much of an impact will it have if they were to sell off, seeing that demand currently way outweighs supply. Sorry, if the question sounds really dumb.
BREND
27th-January-2007, 01:57 PM
Brend, thanks for the information. I must have missed this particular article on Bloomberg.
Just so that I can understand it, the Nickel stockpile on LME is only around 5000 t (25/1/07), are you/they saying that 90% of this is held by one company or they hold a lot more than what's officially listed? If that's all they hold, 5000T isn't vey much at all. How much of an impact will it have if they were to sell off, seeing that demand currently way outweighs supply. Sorry, if the question sounds really dumb.
No worries, no question is too dumb.
The information that 90% of the inventory is held by one US Hedge Fund is not mentioned in any article in Bloomberg.
90% means 90% of the nickel inventory level at LME warehouse, yes not much for nickel. The fund freezes the supply level, while the demand continues to grow, hence will create upward pressure for nickel price.
Are you trading metal futures? We provide all these funds' information to our clients everyday, ie whether funds are controlling the inventory level, whether banks are pushing up particular metals lately, whether funds are buying call options for particular metals?
In today world, hedge funds play a very important role in commodity trading. If you open account with us, we can provide all these information to you as well...
Sometimes I provide funds' information in my blog:
http://basemetal-trading.blogspot.com/
For investors who just want to make their investment decision based on fundamentals, I always ask them to play lead and tin instead, where the involvement of funds are minimal.
Currently I notice a strange situation in the metal market now, all the industrial metals inventory are controlled by funds now. I have a feeling that funds are all prepared to push up metal prices up once copper price is up.
Futures product is a leveraged product. Leverage is a double edge sword, it can work for you, and also work against you.
michael_selway
27th-January-2007, 05:01 PM
No worries, no question is too dumb.
The information that 90% of the inventory is held by one US Hedge Fund is not mentioned in any article in Bloomberg.
90% means 90% of the nickel inventory level at LME warehouse, yes not much for nickel. The fund freezes the supply level, while the demand continues to grow, hence will create upward pressure for nickel price.
Are you trading metal futures? We provide all these funds' information to our clients everyday, ie whether funds are controlling the inventory level, whether banks are pushing up particular metals lately, whether funds are buying call options for particular metals?
In today world, hedge funds play a very important role in commodity trading. If you open account with us, we can provide all these information to you as well...
Sometimes I provide funds' information in my blog:
http://basemetal-trading.blogspot.com/
For investors who just want to make their investment decision based on fundamentals, I always ask them to play lead and tin instead, where the involvement of funds are minimal.
Currently I notice a strange situation in the metal market now, all the industrial metals inventory are controlled by funds now. I have a feeling that funds are all prepared to push up metal prices up once copper price is up.
Futures product is a leveraged product. Leverage is a double edge sword, it can work for you, and also work against you.
More than 90 percent of the LME-monitored nickel stockpiles were held by a single firm as of two days ago, data from the bourse show.
The so-called warrant cash holdings, documents on the ownership of metals registered at LME-monitored warehouses, also indicate single companies each held at least the same proportion of aluminum, aluminum alloy, lead and zinc inventories. The report was updated at 10:30 a.m. in London. The companies may no longer hold the positions as of today.
The LME data don't include metals that have been bought and are due for delivery, known as canceled warrants.
As of yesterday, nickel stockpiles excluding the so-called canceled warrants were 2,700 tons, aluminum totaled 707,775 tons, aluminum alloy 98,920 tons, lead 36,825 tons and zinc 7,700 tons.
Among other metals traded on the LME, aluminum rose $26 to $2,830 a ton, lead added $20 to $1,705 and tin advanced $150 to $12,400. Zinc increased $55 to $3,750.
Yes, one fund holds more than 50% of zinc inventory at LME warehouse.
For zinc, my view is that it has bottomed, but the rebound will not be strong, unless copper rally or strong fall in zinc inventory. :2twocents
joeljp
28th-January-2007, 02:51 PM
hi Brend, thanks for the information and no I'm not a metal futures trader and I know stuff all about metals. I'll check your blogs regularly for any good tips or insights. :)
May I ask where do you see nickel over the next 12 months? Is it likely to stay as high as it is today? Most of the graphs I've seen point to a steady rise. I'm just curious to know how much of an impact hedge funds will have on the price.
michael_selway
28th-January-2007, 02:55 PM
Yes, one fund holds more than 50% of zinc inventory at LME warehouse.
For zinc, my view is that it has bottomed, but the rebound will not be strong, unless copper rally or strong fall in zinc inventory. :2twocents
do you think copper will remound strong?
also how much do funds hold lme copper atm? (althoug it keeps rising the inventory)?
thx
MS
BREND
28th-January-2007, 07:27 PM
hi Brend, thanks for the information and no I'm not a metal futures trader and I know stuff all about metals. I'll check your blogs regularly for any good tips or insights. :)
May I ask where do you see nickel over the next 12 months? Is it likely to stay as high as it is today? Most of the graphs I've seen point to a steady rise. I'm just curious to know how much of an impact hedge funds will have on the price.
Thanks for reading my blog. I predict that nickel price will rise a bit more, and close lower at the end of 2007. Demand for nickel has slowed down in China, this is a sign that upside is getting limited. And new supply of nickel is coming up towards the end of 2007.
Hedge funds of course have a big impact on nickel and other metals in today's world. Copper price rises from $3000 to $7000, heard that it is partly due to the act of a UK hedge fund.
BREND
28th-January-2007, 07:32 PM
do you think copper will remound strong?
also how much do funds hold lme copper atm? (althoug it keeps rising the inventory)?
thx
MS
When you are looking at copper, you have to take note that copper is traded at 3 exchanges, Shanghai, Comex and London Metal Exchange (LME). So even if funds hold huge position in LME, the impact may not be great.
Will copper rebound strong? It really depends on how much State Bureau Reserves of China is buying up copper. As far as I can see from the data at Korea warehouse, I predict that buying has been slow and in small quantity. However I do believe that copper price is bottoming soon. A strong support level at $5500.
Buy some resources stocks now to take advantage of the copper rebound. :rolleyes:
kgee
28th-January-2007, 07:49 PM
Hey Brend any copper favs?
BREND
28th-January-2007, 08:38 PM
Hey Brend any copper favs?
My copper fav is Southern Copper Corporation (which is also my top picks for US market, shown in my blog below) who owns the 2nd biggest copper mine. But share price has risen quite fast since the start of this year.
Alternatively I would suggest buying into BHP Billiton. When copper rebounds, rest of base metals will follow up as well. Even if copper price does not rebound, I still think BHP Billiton is at least 30% undervalued now. I do think that the coming earnings announcement will surprise the market.
michael_selway
28th-January-2007, 10:25 PM
My copper fav is Southern Copper Corporation (which is also my top picks for US market, shown in my blog below) who owns the 2nd biggest copper mine. But share price has risen quite fast since the start of this year.
Alternatively I would suggest buying into BHP Billiton. When copper rebounds, rest of base metals will follow up as well. Even if copper price does not rebound, I still think BHP Billiton is at least 30% undervalued now. I do think that the coming earnings announcement will surprise the market.
for BHP, but will next years earnings be larger or lower than this ones, you reckon, likely?
EPS(c) PE Growth
Year Ending 30-06-07 286.2 9.1 27.0%
Year Ending 30-06-08 293.9 8.9 2.7%
Copper price fall not rotten for miners
Back
Date: 22/1/2007
Author:
Source: The Sydney Morning Herald --- Page: online
Australian copper miners are expected to hold their value despite the metal's price fall. In early 2007 copper is trading at around $US2.56 a pound, compared to $US4 in May 2006. Analysts say the drop will reduce the earnings of miners such as BHP Billiton and Rio Tinto. However they point out price-to-earnings multiples are already low, the companies have been improving efficiencies in other areas, and contract prices for iron ore have risen another 9.5 per cent. Many analysts are also confident copper prices will rise again in 2007.
thx
MS
BREND
29th-January-2007, 04:00 AM
for BHP, but will next years earnings be larger or lower than this ones, you reckon, likely?
EPS(c) PE Growth
Year Ending 30-06-07 286.2 9.1 27.0%
Year Ending 30-06-08 293.9 8.9 2.7%
thx
MS
Nickel price and iron ore prices are still rising for the past 6 months.
I predict earnings will be larger than those numbers. :p:
Even if earnings are bad, what is the risk of buying BHP when PE is so low now?
Wysiwyg
29th-January-2007, 04:12 AM
This article I found while looking at Norilsk (inquisitive about their 20% holding in Lionores Black Swan W.A.) suggests that higher production costs will narrow profit margins.Though the bottom line where the company (Norilsk) plans to outlay a billion/year and other articles say the demand is insatiable.The `in between` player (hedge fund man) always likes his cut. Hope this helps with longer term optimism. :)
The sustained period of higher nickel prices may be the sign that the global nickel industry is entering a new phase, commented Norilsk Nickel chief economist David Humphreys Tuesday at the CRU Ninth World Stainless Steel Conference in Dusseldorf, Germany.
Humphreys suggested that in the future, producers may see a steeper demand growth trend than in the previous 10-20 years, adding that the Asian region would increasingly play a dominant role, possibly displacing nickel use elsewhere in the world. He suggested that China?s presence in the global nickel market may mean the country could become a competitor for nickel producers, in the light of recent moves by Chinese companies to directly invest in various mining projects around the world.
He also said that meeting demand could be more expensive than in the past, due to higher energy prices and the fact that in the future, more production will have to come from nickel laterite deposits, which are more capital-intensive to exploit than sulfide deposits.
Recent high nickel prices have triggered a supply response, said Humphreys, but he referred to figures from CRU Research that indicated production shortfalls: 70,000 mt in 2005 and 40,000 mt so far in 2006. But "resources are substantial," he said, agreeing there was no shortage of nickel.
Humphreys said that the current wave of consolidation in the nickel industry may result in producers better able to meet the costs of exploiting new resources in the future. He added that Norilsk Nickel had committed to spending $1 billion/year from 2007-2010 to avoid a decrease in production from ore grades of declining quality and availability.
Norilsk Nickel is forecast to produce around 250,000 mt of nickel in 2006. --Rob Sheridan, robert_sheridan@platts.com
michael_selway
29th-January-2007, 09:02 AM
Nickel price and iron ore prices are still rising for the past 6 months.
I predict earnings will be larger than those numbers. :p:
Even if earnings are bad, what is the risk of buying BHP when PE is so low now?
BHP's PE isnt really that "low" atm, its about 10 which is quite high considering limited growth and also its peers, like ZFX, MRE etc?
thx
MS
rwkni1
29th-January-2007, 09:34 AM
Limited growth? BHP Currently have 12 new projects/expansions set for completion within the next 2-2.5 years, including Ravensthorpe which will be a top 5 nickel mine globally. Based on consensus data from iress its trading about 8.5x earnings, and traditionally trades at 15x.
chops_a_must
29th-January-2007, 11:39 AM
Limited growth? BHP Currently have 12 new projects/expansions set for completion within the next 2-2.5 years, including Ravensthorpe which will be a top 5 nickel mine globally. Based on consensus data from iress its trading about 8.5x earnings, and traditionally trades at 15x.
This is the problem though. By the time BHP's projects come into play, the supply side of the resources they will be producing more of, will already be in surplus. And Ravensthorpe has been a joke thus far, why is it likely to not be in the future?
rwkni1
29th-January-2007, 12:26 PM
Sure, by the time Ravensthorpe comes on-line it may not be capturing nickel at $18/lb, but I’m pretty confident prices will still be NPV positive in a big way. Even though it’s a laterite project last I heard costs were looking at being about $4-5/lb. That’s a pretty fat profit margin even at prices half of what they are now. And while strike action continues in New Caledonia, Goro, the other big mine projected to come on line in 08 looks like it will lag Ravensthorpe. So I would expect the nickel market to still be tight even by the time Ravensthorpe comes on line next year. Keep in mind that global nickel demand increased 5% YoY in 2006, and Chinese nickel demand increased 15% YoY. Couple this with the fact that sulphide nickel resources are becoming pretty scarce, so most new projects coming on-line will have to be laterite projects like Ravensthorpe that are very difficult technically to set up (hence cost blow outs etc), and I think supply could have a tough time catching up with demand here.
Freeballinginawetsuit
29th-January-2007, 01:30 PM
This is the problem though. By the time BHP's projects come into play, the supply side of the resources they will be producing more of, will already be in surplus. And Ravensthorpe has been a joke thus far, why is it likely to not be in the future?
Sure BHP has had costblowouts and skilled labour shortages at Ravensthorpe and thats been in the pipeline for years. Imagine the wealth of problems the minnows will have in the next few years getting all their 'wollopers' off the ground.
Wheres all the skilled labour going to be sourced from, where's all the plebs who are going to operate the plant coming from and where are they all going to live :rolleyes: .
What makes you think Nickle is expensive at the present, its past prices :D, Im sure last years prices looked cheap and today's unrealistic!.
Personally it all seems a bit of a quagmire to me, thats only getting muddier.
Freeballinginawetsuit
29th-January-2007, 01:50 PM
And just a short addition.
Look at the locations of the Companies that got of the ground running during this boom.
MCR at Woodgie on the Norseman- Esperance road, IGO on the Norseman-Hyden road, Rail infrastructure (close spurs too mines) in place from the past Jap boom and maintained since for wheat export by the cockies>off loading facilties at Esperance. Process facilities at Kambalda....yada yada. The same applies for Ravo's location and the others around the Kambalda dome.
Although a bit off the beaten track, MRE and SMY have similar benifits.
Its not that their isn't Nickle in other locations, its just more cost effective and quicker to ramp in these areas. Now if exploration targets of the midtiers don't come up trumps to nearby infrastructure, the short term Nickle situation will only become worse.
Personaly I think Ravensthorpe is a goer for BHP and the cost blowouts and delays although a bummer, were unavoidable in the current resource climate
Kauri
29th-January-2007, 01:59 PM
Todays West Australian...........
Mine plans at risk: report
27th January 2007, 12:00 WST
Leading research group BIS Shrapnel has warned that a forecast slump in mining investment could threaten flagship WA iron ore and nickel projects now slated for development.
The soon-to-be-released BIS Shrapnel Engineering Construction in Australia report predicts the WA economy will retract sharply over the next three years as the heat goes out of mining investment, although it expects the burgeoning pipeline of LNG projects to soften the blow.
“It is likely that a lot of projects will still go ahead this year with prices falling, but once you get into 2008-09 a lot of those projects, which looked pretty likely to go ahead, will probably get shelved,” BIS Shrapnel senior economist Richard Robinson said.
“The work that has started on those projects will continue so you won’t see a big downturn probably until the 2008-2009 financial year and I think that is when you will get the big effects on the WA economy.
“One of the big differences between the downturn in this mining investment cycle and the downturn in the late 1990s, which really affected the WA economy, is the LNG plants. That is one of the things that will stop the dramatic slide.”
Defying the assurances of resource bulls, Mr Robinson said China’s red-hot investment growth was unsustainable and would begin to tail off in coming years, reducing demand for commodities and dragging prices lower.
He said the big ticket nickel developments and Mid-West iron ore producers who were planning to run exports out through Geraldton or the new port at Oakajee were the most likely to be hurt by the lower prices and the ensuing slump in resource sector investment.
“Because they have to build a rail line, a new port and even though they reckon they have Chinese backing, the Chinese will back-pedal and they have done that in the past if things don’t stack up,” he said.
Gindalbie Metals, MidWest Corporation and Murchison all have iron ore projects slated for the Mid-West while Consolidated Minerals, Lion-Ore Mining and Western Areas are planning new nickel mines. ...........
TRACEY COOK
siempre33
29th-January-2007, 04:16 PM
this is a great Nickel thread....my friend koan liked it so much I think he's STILL reading/perusing....he's a bit dyslexic, but brilliant....posted @
siliconinvestor.com
: siempre33 who wrote (31122) 1/28/2007 3:39:21 PM
From: koan Read Replies (1) of 31167
That was a hell of a find seimpre. Everyone should go to that aussie web site and read a bit of it.
BREND: "How I know? I'm a metal futures dealer, I have access to a bit more information than retail investors."
Brend: "Not only that, currently 1 US hedge fund holds more than 90% of nickel inventory at LME warehouse now. "??
Brend: "BREND Join Date: Jan 2007
Location: Singapore
Posts: 78
Quote:
Originally Posted by joeljp
Brend, thanks for the information. I must have missed this particular article on Bloomberg.
Just so that I can understand it, the Nickel stockpile on LME is only around 5000 t (25/1/07), are you/they saying that 90% of this is held by one company or they hold a lot more than what's officially listed? If that's all they hold, 5000T isn't vey much at all. How much of an impact will it have if they were to sell off, seeing that demand currently way outweighs supply. Sorry, if the question sounds really dumb.
No worries, no question is too dumb.
The information that 90% of the inventory is held by one US Hedge Fund is not mentioned in any article in Bloomberg.
90% means 90% of the nickel inventory level at LME warehouse, yes not much for nickel. The fund freezes the supply level, while the demand continues to grow, hence will create upward pressure for nickel price.
Are you trading metal futures? We provide all these funds' information to our clients everyday, ie whether funds are controlling the inventory level, whether banks are pushing up particular metals lately, whether funds are buying call options for particular metals?
In today world, hedge funds play a very important role in commodity trading. If you open account with us, we can provide all these information to you as well...
Sometimes I provide funds' information in my blog:
http://basemetal-trading.blogspot.com/
For investors who just want to make their investment decision based on fundamentals, I always ask them to play lead and tin instead, where the involvement of funds are minimal.
Currently I notice a strange situation in the metal market now, all the industrial metals inventory are controlled by funds now. I have a feeling that funds are all prepared to push up metal prices up once copper price is up.
Futures product is a leveraged product. Leverage is a double edge sword, it can work for you, and also work against you.
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Well the punters voted in the green for the Nicklers today Kauri, There all pushing or at all time highs.
But I seem to remember the newspapers peddling that analyst rubbish, around June, Last Year .
'It was on the front page of the West Australian', if memory serves me correctly. :D
chops_a_must
29th-January-2007, 04:55 PM
Well the punters voted in the green for the Nicklers today Kauri, There all pushing or at all time highs.
With about half the volume of the last few trading days. A top perhaps?
Freeballinginawetsuit
29th-January-2007, 05:22 PM
Hopefully not I haven't sold yet. MCR and SMY could be starting another upleg, consolidation the last few days and a bit of time for punters to get over the fear of spot dropping maybe, the usual conondrums they face buying at highs :rolleyes: . Anyway I'll give momentum a chance. As far as I'm aware Chinese steel mills are in full production ATM and their hungry during these periods, I still remember when they drew back for a while last year :o ,has a huge impact on inventories
MRE looks like it might just be starting a run though, long overdue :D
chops_a_must
29th-January-2007, 10:31 PM
Hopefully not I haven't sold yet. MCR and SMY could be starting another upleg, consolidation the last few days and a bit of time for punters to get over the fear of spot dropping maybe, the usual conondrums they face buying at highs :rolleyes: . Anyway I'll give momentum a chance. As far as I'm aware Chinese steel mills are in full production ATM and their hungry during these periods, I still remember when they drew back for a while last year :o ,has a huge impact on inventories
MRE looks like it might just be starting a run though, long overdue :D
I'm not so sure. The charts I'm looking at are showing buyers drying up (if i'm reading them right). And I don't like the chances of any resources going up tomorrow at this minute. Glad I got out of OXR as well. The way MCR and MRE closed on Thursday I was surprised they didn't gap down today, and I will be surprised if they don't gap down tomorrow. Regardless of what the nicklers would have done on their own, if there is general bearish sentiment in the resources sector, I think it will pull them back, or at least slow them anyway.
chops_a_must
30th-January-2007, 12:30 PM
Hopefully not I haven't sold yet. MCR and SMY could be starting another upleg, consolidation the last few days and a bit of time for punters to get over the fear of spot dropping maybe, the usual conondrums they face buying at highs :rolleyes: . Anyway I'll give momentum a chance. As far as I'm aware Chinese steel mills are in full production ATM and their hungry during these periods, I still remember when they drew back for a while last year :o ,has a huge impact on inventories
MRE looks like it might just be starting a run though, long overdue :D
Lol! Well, MCR and MRE did gap down... briefly. MRE looks to be the only one faltering.
A great quarterly for MCR. Almost secures its place as a fantastic growth stock.
Freeballinginawetsuit
30th-January-2007, 12:47 PM
Yep, MRE still has no volume/interest but still feel their earnings will surprise and will be a decent divvy. The market is a strange one, maybe that might highlight some interest. Their still sitting just below highs though.
MCR didnt gap down :confused:. Its nudging highs and if it wasn't still getting insto sold down, would be close to were SMY is now.
MCR's report just out is appealing,certainly management are delivering. They are looking better on the books than SMY (but the share price dosen't reflect).
Freeballinginawetsuit
30th-January-2007, 03:33 PM
Lol! Well, MCR and MRE did gap down... briefly. MRE looks to be the only one faltering.
.
Well my heads still hanging out their chops, maybe you can get out youre axe tommorow :D
With MCR up significantly on volume, SMY having a ripper, IGO up and MRE still knocking at the door 'with a bit of volume', still no reasons to sell
Nickles due for some pressure though, surely?
chops_a_must
30th-January-2007, 07:31 PM
Well my heads still hanging out their chops, maybe you can get out youre axe tommorow :D
With MCR up significantly on volume, SMY having a ripper, IGO up and MRE still knocking at the door 'with a bit of volume', still no reasons to sell
Nickles due for some pressure though, surely?
I got back into MCR today. After a small drop in buyers and increase in sellers, buyers have come back in with a sharp drop in sellers. It looks like a similar story for SMY. Although MRE looks shaky. IGO might be looking like the strongest of the lot. Heavily underbought compared to the others. And just about the only nickler not at all time highs. There are still legs it seems.
Freeballinginawetsuit
31st-January-2007, 09:41 AM
Nickle Prices O/N
By Anna Stablum
LONDON, Jan 30 (Reuters) - Copper on the London Metal Exchange ended firm on Tuesday, while nickel fell as pay talks continued at a major nickel operation
Nickel was down $1,750 or 4.7 percent at $35,650, off its record peak of $38,950 recorded on Friday.
"The market is not expecting a big disruption even if they do go on strike," analyst David Thurtell at BNP Paribas said.
A looming strike at Xstrata's Sudbury operations in Ontario, Canada, had been supporting prices last week, but news of talks progressing dampened sentiment. [ID:nN30316803]
"We have a day and half left and the teams are hard at work," said Ian Hamilton, a spokesman for Xstrata Nickel.
If the parties fail to reach an agreement by the time the current contract expires at midnight on Wednesday, more than 1,000 mill, mine and smelter workers will walk off the job.
Stocks in LME warehouses were unchanged at 4,278 tonnes, of which only 1,680 tonnes were available to the market.
Daily global consumption of nickel stands at 3,800 tonnes.
chops_a_must
31st-January-2007, 10:43 AM
I thought it only dropped 1.49%
Anyway, it certainly has knocked the stuffing out of the run.
porkpie324
31st-January-2007, 11:54 AM
Did the same as you choppy with MCR, opened a pos yest morning, but I closed in the last minute of trading yesterday got a 6c movement, looking at todays trade so far I did the right thing, also closed a third of my IGO pos first thing this morning, but may just open again IGO looking well supported. After my KZL experiance I'm making up lost ground.porkpie
porkpie324
31st-January-2007, 01:19 PM
After about 3hrs trading today all nickel miners looking weak, is this the start of a correction?, SMY although few sellors buyers seem reluctant to push prices up, MCR looks decidely toppy same with JBM, MRE & IGO now following, just holding 2 IGO pos and watching carefully. porkpie
Kauri
31st-January-2007, 02:08 PM
After about 3hrs trading today all nickel miners looking weak, is this the start of a correction?, SMY although few sellors buyers seem reluctant to push prices up, MCR looks decidely toppy same with JBM, MRE & IGO now following, just holding 2 IGO pos and watching carefully. porkpie
Hi Porkpie,
The main thing I look for is the pattern below. After an exuberant run a relatively wide gap up bar forms that closes near its lows on above ave vol is a warning. Confirmation is if the following bar is also relatively wide, moves into new low ground on increased and/or above ave vol. Not always correct, but quite often this signals that a top of some sort is in. Of course the opposite can also signal that a bottom is in. It is a stronger signal if it ties in with a significant trend line, support/resistance, fib, E/W, or whatever you follow. I haven't been through the nicklers today but this may be what is setting up?
Cheers..
Kauri
BREND
31st-January-2007, 02:28 PM
Last night at London Metal Exchange, there are many hedge funds selling nickel.
porkpie324
31st-January-2007, 03:48 PM
Volatile last hour trading with SMY, I could'nt resist them so opened a pos at 3.11 20 mins ago and as I type looks like some support.porkpie
Freeballinginawetsuit
31st-January-2007, 04:30 PM
Last night at London Metal Exchange, there are many hedge funds selling nickel.
Yep, their in the game to make money, not put the Nickle in the Piggy Bank :rolleyes:
BREND
31st-January-2007, 07:38 PM
Yep, their in the game to make money, not put the Nickle in the Piggy Bank :rolleyes:
If there is no strike at Sudbury mine tomorrow, we can make money by shorting nickel too.
Kauri
31st-January-2007, 08:42 PM
Talks resumed Tuesday between Xstrata PLC and unionized workers at its Sudbury nickel mining operations as a Feb. 1 deadline to reach a new agreement loomed.
Tuesday's talks were the first since Jan. 25, when the two sides exchanged offers but could not reach a deal.
The Bloomberg news service said the two sides met for two hours, with union officials saying they are waiting on a counter-offer.
The current labour agreement that covers about 1,000 members of the Canadian Auto Workers union will expire at midnight on Jan. 31.
:D The union has already made some preparations for a work stoppage, including moving trailers to the entrances of mine sites and bringing in supplies of firewood, Bloomberg reported. :D
Pay, vacation scheduling and the rights of workers to return to jobs they were shifted from involuntarily are the stumbling blocks to a new collective agreement.
Xstrata's Sudbury nickel operations produce about four per cent of the world's supplies.
BREND
31st-January-2007, 11:49 PM
Talks resumed Tuesday between Xstrata PLC and unionized workers at its Sudbury nickel mining operations as a Feb. 1 deadline to reach a new agreement loomed.
Tuesday's talks were the first since Jan. 25, when the two sides exchanged offers but could not reach a deal.
The Bloomberg news service said the two sides met for two hours, with union officials saying they are waiting on a counter-offer.
The current labour agreement that covers about 1,000 members of the Canadian Auto Workers union will expire at midnight on Jan. 31.
:D The union has already made some preparations for a work stoppage, including moving trailers to the entrances of mine sites and bringing in supplies of firewood, Bloomberg reported. :D
Pay, vacation scheduling and the rights of workers to return to jobs they were shifted from involuntarily are the stumbling blocks to a new collective agreement.
Xstrata's Sudbury nickel operations produce about four per cent of the world's supplies.
Nickel inventory falls 306mt today, this will pushi nickel price up.
I had suggested my clients to short nickel today if the price rises to $38000 caused by the fall in inventory. Because nobody will be able to catch the price when the result between Xstrata PLC and unionized workers at its Sudbury nickel mine is announced.
This recommendation only applies to investors who believe that nickel price is near the peak already. I'm one of the believer.
chops_a_must
1st-February-2007, 11:26 AM
You'd be a brave person to stay in at the moment:
"Xstrata hasn't returned to the bargaining table today, said Richard Paquin, lead negotiator for the Canadian Auto Workers union. He said he thought an agreement might still be reached by the deadline."
...
"SUDBURY, Ont. (CP) -- Anyone holding their breath over contract talks between Xstrata Nickel, a subsidiary of Xstrata Plc. [LSE:XTA], and Local 598 of the CAW union can take a short breath following news Tuesday that progress is being made toward reaching an agreement.
But it appears the two sides are still apart on critical issues related to job postings, vacations and money.
An issue of vital importance to the union - an assurance that unionized employees will fill mining jobs at the new Nickel Rim South mine when it enters production next year - has been resolved, according to the union."
If they are making progress, I doubt they will strike. Some are forecasting a 20% drop in the nickel price if the strike doesn't go ahead. Just some food for thought...
BREND
1st-February-2007, 04:45 PM
You'd be a brave person to stay in at the moment:
"Xstrata hasn't returned to the bargaining table today, said Richard Paquin, lead negotiator for the Canadian Auto Workers union. He said he thought an agreement might still be reached by the deadline."
...
"SUDBURY, Ont. (CP) -- Anyone holding their breath over contract talks between Xstrata Nickel, a subsidiary of Xstrata Plc. [LSE:XTA], and Local 598 of the CAW union can take a short breath following news Tuesday that progress is being made toward reaching an agreement.
But it appears the two sides are still apart on critical issues related to job postings, vacations and money.
An issue of vital importance to the union - an assurance that unionized employees will fill mining jobs at the new Nickel Rim South mine when it enters production next year - has been resolved, according to the union."
If they are making progress, I doubt they will strike. Some are forecasting a 20% drop in the nickel price if the strike doesn't go ahead. Just some food for thought...
Only one client listen to my advise to short nickel yesterday, since nickel price was pushed up by a big fall in inventory level. I think its a good calculated risk to take.
No strike at Sudbury mine. So expects nickel price to fall tonight at London.
Conclusion, my client made the right bet. :rolleyes:
chops_a_must
1st-February-2007, 11:04 PM
Only one client listen to my advise to short nickel yesterday, since nickel price was pushed up by a big fall in inventory level. I think its a good calculated risk to take.
No strike at Sudbury mine. So expects nickel price to fall tonight at London.
Conclusion, my client made the right bet. :rolleyes:
Any guesses where the nickel price will end up? The strike is off, it could get nasty.
If Sudbury supplies 4 percent of the Worlds Nickle, it would be reasonable to presume this news alone is worth a couple of percent to prices.
If you feel that the timing of Nickles recent run was mainly on the back of an impending strike at Sudbury......it could get nasty.
Personally I feel Nickle is relatively tight as a commodity (Short Term), with the stellar run of Nicklers SP's recently..... a twenty percent drop in SP's......... 'their still 30 percent up from a few weeks back'. No reason to stress IMO.
If you were trading them short term, maybe the highs have passed, still a decent gain will be had in an exit tomoz.
Remember, if you held out till today and took the punt on a Sudbury strike. Imagine how the market would have over reacted to that one short term :eek:
Freeballinginawetsuit
2nd-February-2007, 03:07 AM
Well the market didn't over react too much.
By Daniel Magnowski
LONDON (Reuters) - Nickel futures fell 3 percent in early business at the London Metal Exchange on Thursday after a deal to stop a potential strike at the Sudbury, Ontario operations of miner Xstrata (XTA.L: Quote).
Three-months futures <MCU3> traded as low as $35,900 per ton, down $1,200 from its previous closing price, before rebounding to $36,650 by the end of the official session.
The Anglo-Swiss mining firm and the union representing around 1,000 workers reached tentative agreement on a new contract late on Wednesday, narrowly avoiding a strike which would have further tightened supply of the metal
"The focus is back again on dwindling stock levels, off another 600 (tonnes) today, and forcing the market to pare earlier losses caused by the Sudbury settlement," analyst Edward Meir of Man Finacial said in a market report.
"We like the odds of the upside resuming at this stage,"
Traders said the fall in price was predictably short-lived, given the scarcity of metal on the market.
"The news is out there but I don't think many people expected there to be a long strike," one dealer said.
He said demand for metal was strong, and doubted people had been hoarding stocks in case of a strike.
"There are not going to be big deliveries back to warehouses due to this non-event."
At around $36,500, nickel is up $2,000 on the start of the year, but almost $2,500 down from the all-time high it reached last month.
Nickel dropped in London after Xstrata Plc said it reached a ``tentative'' agreement on a new labor contract with workers at a Canadian unit, avoiding a strike that would have affected 4 percent of global supply.
The union represents 1,027 workers at the Sudbury, Ontario, unit and threatened to strike unless agreement was reached by yesterday's deadline. Nickel rose to a record last week on speculation a strike would exacerbate a global supply shortfall.
``The market has been surprised by the last-minute settlement,'' said Kevin Tuohy, a trader at Man Financial Ltd. , one of 11 companies trading on the London Metal Exchange's floor. ``You may see prices down by another $2,000, $3,000,'' he said in an interview.
Nickel for delivery in three months on the LME fell $400, or 1 percent, to $36,600 a metric ton as of 12:28 p.m. local time. It earlier slid as much as 3 percent to $35,900. The metal used in stainless steel traded at a record $38,950 on Jan. 26.
The metal has risen more than sixfold in the past five years on demand from China, which overtook Japan last year as the world's largest stainless-steel producer. Global demand will beat supply by 1,000 tons in 2007, from a deficit of 6,000 tons last year, Daniel Brebner, an analyst at UBS AG, said yesterday in a report.
Nickel's decline wasn't ``massive'' in the context of the metal's historical price movement, Tuohy said. ``That indicates the market is very tight.''
Inventories Slump
Inventories dropped 606 metric tons, or 15 percent, to 3,366 tons, the LME said today in a daily report. That's the largest one-day decline since Aug. 9, 2004. Stockpiles have plunged 91 percent in the past 12 months to their lowest since July 1991. Feb. 1 (Bloomberg) -- Nickel dropped in London after Xstrata Plc said it reached a ``tentative'' agreement on a new labor contract with workers at a Canadian unit, avoiding a strike that would have affected 4 percent of global supply.
The union represents 1,027 workers at the Sudbury, Ontario, unit and threatened to strike unless agreement was reached by yesterday's deadline. Nickel rose to a record last week on speculation a strike would exacerbate a global supply shortfall.
``The market has been surprised by the last-minute settlement,'' said Kevin Tuohy, a trader at Man Financial Ltd. , one of 11 companies trading on the London Metal Exchange's floor. ``You may see prices down by another $2,000, $3,000,'' he said in an interview.
Nickel for delivery in three months on the LME fell $400, or 1 percent, to $36,600 a metric ton as of 12:28 p.m. local time. It earlier slid as much as 3 percent to $35,900. The metal used in stainless steel traded at a record $38,950 on Jan. 26.
The metal has risen more than sixfold in the past five years on demand from China, which overtook Japan last year as the world's largest stainless-steel producer. Global demand will beat supply by 1,000 tons in 2007, from a deficit of 6,000 tons last year, Daniel Brebner, an analyst at UBS AG, said yesterday in a report.
Nickel's decline wasn't ``massive'' in the context of the metal's historical price movement, Tuohy said. ``That indicates the market is very tight.''
Inventories Slump
Inventories dropped 606 metric tons, or 15 percent, to 3,366 tons, the LME said today in a daily report. That's the largest one-day decline since Aug. 9, 2004. Stockpiles have plunged 91 percent in the past 12 months to their lowest since July 1991.
Doesn't look to me like it's time to get out of Nickel yet!
BREND
2nd-February-2007, 09:24 PM
Yes, seems like nickel uptrend is unstoppable.
Looking to buy CVRD, the Brazil company that bought over Inco (owns nickel mines). But share price rises too sharply, waiting for a correction.
markrmau
3rd-February-2007, 04:28 PM
Only one client listen to my advise to short nickel yesterday
Hope they covered?
porkpie324
4th-February-2007, 07:55 AM
There's an interesting broker report on the mincor website mincor.com.au by Patersons comparing MCR,IGO & SMY which does partiarly explain the recent share prices of these three companies. porkpie
BREND
4th-February-2007, 02:30 PM
Hope they covered?
Its ok, they own phyiscal nickel, they are doing it for hedging. And nobody can say for sure that nickel price will not fall next one month.
Though nickel price has risen last Friday, I heard that hedge funds have been shorting nickel slowly. Nickel inventory level has fallen quite a bit lately, I believe this is manipulated by hedge funds (as there is one fund holding more than 90% of nickel inventory at LME early last week). So with funds shorting nickel quietly, and slowly, it might signal that peak of nickel is reaching soon.
$38,500 might be the peak, my guess.
exgeo
5th-February-2007, 10:15 AM
One of the few large independent nickel producers still in existence (after WMC and Inco got taken out) is Lionore mining - LIM.AX. Currently trading at a PE of 6 (EPS of $2.21 and SP of $13.33).
Hi chops,
I'd only be guessing but if Red Kite is in BIG trouble I assume it will need to unwind quite a few of its positions across the market to free up some cash to try to stall its investors. At least with nickel it would be selling into strength. Wouldn't be surprised to see a lot of volatility across the board over the next few weeks with a generally weakening bias, always remembering that they are not the only fund in the market and I am sure a lot of fund investors are getting nervous..... remember that the above is pure uninformed assumptions
BREND
6th-February-2007, 02:30 AM
Hi chops,
I'd only be guessing but if Red Kite is in BIG trouble I assume it will need to unwind quite a few of its positions across the market to free up some cash to try to stall its investors. At least with nickel it would be selling into strength. Wouldn't be surprised to see a lot of volatility across the board over the next few weeks with a generally weakening bias, always remembering that they are not the only fund in the market and I am sure a lot of fund investors are getting nervous..... remember that the above is pure uninformed assumptions
Red Kite holds a lot of aluminum, this metal could be the next target, just a guess.
BREND
6th-February-2007, 02:31 AM
Bank selling nickel now, pushing down nickel price.
Red Kite holds a lot of aluminum, this metal could be the next target, just a guess
Bush Trader
7th-February-2007, 11:10 AM
This article may be of interest to those who have not read it.
Cheers
Nickel Divides Market Experts
Source: FN Arena News - February 06 2007
Smith Barney Citigroup's commodity specialists pointed out in December the price performance of nickel had simply stunned the market with the spot price reaching 20 year highs and global demand for the metal proving surprisingly resilient.
In line with views held by the majority of market experts, Citigroup flagged in December the year 2007 was likely to bring some relief to steel manufacturers and other end users of the metal. However, thus far, and the January carnage included, nickel has remained on top of the metals class.
It would seem the metal has now created a great divide within the investment community, placing commodity experts at JP Morgan and Deutsche Bank opposite each other.
To JP Morgan all this is simply the prelude to a gigantic correction in a not too distant future. UK based Jon Bergtheil predicted this week: "Nickel's fall will be worse than the pace copper has seen". Bergtheil talks about an "over-inflated" market and investors should better prepare for a price fall in the order of 25% this year ("at least" according to the JPM specialist).
Others are not necessarily on par with the JP Morgan view. At Deutsche Bank, analyst Michael Lewis, has thus far kept the metal as his favourite pick among industrial metals. Lewis maintained in early January producers simply cannot keep up with global demand for the metal.
Interestingly, GSJB Were commodity analyst Malcolm Southwood and his two UK colleagues Paul Gray and Marc Bonter refrained from any comment on the nickel market in their update on metals markets this week. The team took the effort to reiterate its positive view on copper, despite that metal continuing to feel the pain of hedge fund selling.
Meanwhile, last week's main victim of unexpected market selling pressure, zinc, has started to recover from what has already been dubbed "the largest weekly drop in at least 17 years".
Investors can maybe draw solace from a Macquarie update informing the bank's clientele "the zinc market will remain relatively tight in the first half and we expect a bounce in pricing, although not to levels we saw last year".
Again, GSJBW preferred not to comment.
exgeo
7th-February-2007, 11:58 AM
Informative article re: nickel supply, demand and substitution with Peter Johnston (former head of WMC nickel division, now MRE)
Exgeo,any chance of your pasting that article on here?
Cheers, jj
exgeo
7th-February-2007, 07:24 PM
February 06, 2007
Talk Of Nickel Substitution Can Be Dismissed
By Our Man In Oz
Substitution is a word used increasingly in debate about the nickel market, if only because some observers cannot accept that a price of US$18 a pound can last long. Popular as the theory is of nickel being replaced in the making of stainless steel by manganese and chrome, the truth is a different matter as China discovered last year when it opted for a lower grade stainless, called in the trade “nickel 200”. That material, which uses between two-and-four per cent nickel, is much cheaper than the next stainless steel grade, nickel 300, which uses between eight-and-10 per cent nickel. The problem, as China discovered to its annoyance, is that in certain applications, such as in air-conditioners, it rusts – which diminishes by a wide margin the concept of a steel being stainless.
Savvy investors will immediately spot the point of that Nickel 101 lecture and perhaps re-think any decision they are about to make such as selling shares in nickel miners because they believe the market has peaked. Essentially, the message is that “steels ain’t steels” and nickel has a guaranteed market because substitutes ain’t what they’re cracked up to be.
For long-term followers of the nickel market, including Minesite’s man in Oz, the Chinese air-conditioning scandal, which saw the “nickel 200” series banned for several months, is a sobering form of re-education. Before hearing about that affair, from Peter Johnston, a man who has forgotten more about nickel than most people have ever learned, Minesite’s correspondent had been naively pursuing a theory that the nickel market was about to pop because the sky-high price had opened the door to substitution.
Not so, said Johnston, chief executive of the Australian nickel producer, Minara Resources. “I think we’ve another good two-to-three years of high prices,” he said. But surely, countered Minesite in its chat with Johnston in his Perth office, one bad experience with Chinese air-conditioners isn’t enough to kill off all forms of substitution. Perhaps not, said Johnston, but there are other factors at work, such as the booming demand for nickel in Europe. At this point Minesite decided it would be better to shut up and listen and stop walking around displaying his ignorance.
Johnston, who cut his teeth in nickel and might be remembered by some London types as chief executive of the gold and nickel division of the old Western Mining Corporation, then took Minesite gently through his thoughts about nickel, some of which might be “talking his Minara book”, but all of which is knowledge distilled over an eventful career which once saw him a favourite for the chief executive’s chair at WMC – and mightn’t mining history have taken a different turn if that had happened.
Before Johnston’s nickel tutorial a brief word on what’s happening in Europe, a place that everyone in Oz has given up as a no-growth region populated by old men and women wearing grey cardigans and chatting in cafés. Europe, as seen through the eyes of a nickel miner, is made up of series of mini-Chinas. How is this so? Because Eastern Europe is undergoing a high-metal consuming phase, like China, as it makes up for time lost in the communist miasma. Poland, Romania, Bulgaria and Hungary might not match the demands of 1.2 billion modernising Chinese – but they’re doing their best which is why the growth rate of the nickel consumption in Europe has risen from an annualised one per cent a year to a very surprising six per cent a year as demand for stainless steel rises rapidly.
Enough of the lecture. This is Johnston’s explanation, and remember he is the man who has run two of the world’s biggest nickel businesses, and is also the man who created the world’s first cobalt and nickel-trading websites. “There was some substitution,” he said. “It was mainly in the nickel 200 series which is the low nickel-bearing stainless. It is very strong in India, but when transferred into China they used it for the wrong applications, air-conditioners and things like that. It actually started to rust. China banned it for a while. But, before they did that, they started selling nickel 200 as scrap, which meant it contaminated the scrap cycle, which also annoyed a few of the steel mills.
“To be fair, nickel 200 will grow. It has a market in things such as pots and pans and other low-intensity applications. It’s not a nickel free material, it’s low nickel and it does have certain applications. It’s no good in food factories, and hand-rails, or marine environments. There are a range of nickel products, which use commodity trading names, there’s nickel 308, 314, 316, and so on. The general product is in the 300 series.”
If, as Johnston says, stainless steels ain’t stainless steels, and nickel demand is as strong as ever, how does that affect his view of the nickel market. “Look, I have to acknowledge that there is always a growing demand for substitution in a period of high prices,” he said. “Customers always look for a cheaper alternative. That can even go as far a stopping the use of stainless steel in architecture and returning to concrete. In every high-priced environment some of that occurs. But the issue with stainless steel is that substitution cannot occur in some of its applications. You still need high quality stainless for milk tankers, you’re not going to make concrete milk tankers” – a point which draws a loud guffaw from Johnston.
“My reading of the market hasn’t changed. I’ve been saying for two years that we’re in a stronger-for-longer period, and I can see another two-to-three years to go. The market fundamentals for nickel are the best for all commodities because of limited new supply, and extraordinarily strong demand out of China. And then there has also been a big increase in stainless demand in Europe. So we really have two markets going for us thanks to the growth we’re seeing in Eastern Europe, which is dragging demand out of the steel mills in places like Germany where they have full order books. They’re in that spend zone where they have to spend a lot on infrastructure”, and that means stainless steel, which means nickel, which means nickel miners etc etc etc, and so on, down the food chain. It helps explain why Minara shares have more than trebled over the past 12 months and Jubilee Mines has not been far behind.
BREND
22nd-February-2007, 06:54 PM
Consumers had already stopped buying nickel when it was $33,000mt. But price keeps rising, and inventory keeps falling, guess who is manipulating the market?
rederob
22nd-February-2007, 07:25 PM
Consumers had already stopped buying nickel when it was $33,000mt. But price keeps rising, and inventory keeps falling, guess who is manipulating the market?
I reckon Norilsk Nickel is.
I suspect it is they that continue to deliver into Asian LME warehouses, where demand is not as strong as in Europe.
Some nickel is available in the US and most European nickel is cancelled.
Norilsk have been master nickel price manipulators for years, previously where they hoarded inventory and now where they deliver to remote locations.
The present impact is to squeeze European physical buyers to pay higher prices and move out the backwardation.
With backwardation approaching $3k/tonne, each 6tonne LME lot delivered gives a spot reward of over $15k over forward delivery (3 months out).
Norilsk are proven masters of this game, and while "funds" may be playing their part in keeping nickel artificially higher, Norilsk is ensuring the ride to the top is maintained for as long as possible.
BREND
22nd-February-2007, 09:23 PM
I reckon Norilsk Nickel is.
I suspect it is they that continue to deliver into Asian LME warehouses, where demand is not as strong as in Europe.
Some nickel is available in the US and most European nickel is cancelled.
Norilsk have been master nickel price manipulators for years, previously where they hoarded inventory and now where they deliver to remote locations.
The present impact is to squeeze European physical buyers to pay higher prices and move out the backwardation.
With backwardation approaching $3k/tonne, each 6tonne LME lot delivered gives a spot reward of over $15k over forward delivery (3 months out).
Norilsk are proven masters of this game, and while "funds" may be playing their part in keeping nickel artificially higher, Norilsk is ensuring the ride to the top is maintained for as long as possible.
Noted, I think nickel is at bubble stage now.
Pricing is based on manipulation rather than based on fundamental supply and demand.
Few weeks ago, I heard that 2 funds are holding 70% of Nickel inventory at LME warehouse. By manipulating the flow of inventory, which is so low now, basically they are also controlling the nickel price.
Halba
22nd-February-2007, 10:09 PM
I have taken a contrarian view and my fund has liquidated 1/4 of my nickel holdings today.
Mainly they were in AGM.
I've had a nice run and its time to move on.
rederob
22nd-February-2007, 10:26 PM
Noted, I think nickel is at bubble stage now.
Pricing is based on manipulation rather than based on fundamental supply and demand.
Few weeks ago, I heard that 2 funds are holding 70% of Nickel inventory at LME warehouse. By manipulating the flow of inventory, which is so low now, basically they are also controlling the nickel price.
I will check over the next few days, but I think that there are three players with their hands up for well in excess of 100% of on warrant metal.
These data are always 2 days old from LME.
rederob
22nd-February-2007, 11:08 PM
Few weeks ago, I heard that 2 funds are holding 70% of Nickel inventory at LME warehouse. By manipulating the flow of inventory, which is so low now, basically they are also controlling the nickel price.
Here's the info I was after:
BREND
23rd-February-2007, 01:34 AM
Here's the info I was after:
Is that from Reuters? That's not what I see in bloomberg.
Kauri
24th-February-2007, 11:47 PM
Nothing concrete but going through the nickle stocks I get the feeling that nickle may be ready to pause/correct a bit?? Maybe a bit of a blow-off?? ( Its almost certain to set new highs now I've said that :rolleyes: ).
rederob
25th-February-2007, 12:11 AM
Nothing concrete but going through the nickle stocks I get the feeling that nickle may be ready to pause/correct a bit?? Maybe a bit of a blow-off?? ( Its almost certain to set new highs now I've said that :rolleyes: ).
Kauri
Remember what copper did last year: It went higher and higher and higher hitting an RSI in the high 80s and holding for days.
That happened some months after coppers inventory had bottomed.
Nickel inventories remain near historical lows, with the proportion of cancelled warrants representing about 40% of total LME metal.
So although I agree we are very close to that blow off, we could still be weeks away.
Definitely not a market I would touch with the proverbial barge pole
at present.
Kauri
25th-February-2007, 12:22 AM
Red,
Only posted that to see if you were still awake.. :) . Must admit it is a long time since I have looked at an RSI, or any indicator other than price and vol, for a long long time. Seems that nickle keeps moving up but the likes of MCR seem to have hit a wall. Maybe its the New Moon affect in China, maybe not.
rederob
25th-February-2007, 02:15 AM
Kauri
Hard to get a decent take on LME traded volumes, so I look for something that gives a better clue to near term price action.
We also have an active spot trade outside of LME that complicates things.
What's awake?
An Irish shindig?
Kauri
25th-February-2007, 02:24 AM
Kauri
Hard to get a decent take on LME traded volumes, so I look for something that gives a better clue to near term price action.
We also have an active spot trade outside of LME that complicates things.
What's awake?
An Irish shindig?
Red,
Sorry for the misunderstanding, I don't even chart nickle as such as it is not something I can trade. All of my musings come from nickle share prices/vols.
Irish shindig, Sweet Mother MacReady, and to think I refrained from asking if you were alert. :p:
Halba
25th-February-2007, 09:18 AM
If supply comes nickel could retrace from $19/lb heady levels to $15/lb in amatter of weeks. I wouldn't want to be in nickel companies then, coz then analysts will be talking about 13,12,11$/lb which will dramatically reduce nickel stock profits.
rederob
25th-February-2007, 09:39 AM
If supply comes nickel could retrace from $19/lb heady levels to $15/lb in amatter of weeks. I wouldn't want to be in nickel companies then, coz then analysts will be talking about 13,12,11$/lb which will dramatically reduce nickel stock profits.
True, Halba.
But this is not a cargo cult and nickel won't be falling from the sky.
The change is more likely to be from less demand than more supply as new nickel mines and brownfield ramp-ups take a fair bit of planning.
The likely culprit for a sharp correction will be funds exiting with fat profits, no doubt to re-enter once their avaricious carnage has has killed the price for mere mortals.
Halba
25th-February-2007, 10:41 AM
impossible to pick the top. the scenario i posted is more likely to happen from a tail off in demand which seriously crippled both ZINC and copper(both did not suffer from supply increases, how can supply come on so quick?)
rederob
25th-February-2007, 11:04 AM
impossible to pick the top. the scenario i posted is more likely to happen from a tail off in demand which seriously crippled both ZINC and copper(both did not suffer from supply increases, how can supply come on so quick?)
Zinc and copper have experienced similar, but time-shifted fates.
Over a year ago, copper suffered an inventory increase via Chinese SRB sales.
Zinc suffered a similar fate several months ago when local tax rebates made deliveries to LME more profitable than selling into the market.
It is fair to say that zinc, copper and nickel production is increasing across the globe.
So too is demand.
And the battle lines are drawn at the point of imbalance.
Nickel is sensitive to stainless steel output. Recent orders have slowed, but demand is still robust.
We had an event horizon that showed a few months of strong nickel demand, and presently we have fog.
michael_selway
26th-February-2007, 09:07 PM
Zinc and copper have experienced similar, but time-shifted fates.
Over a year ago, copper suffered an inventory increase via Chinese SRB sales.
Zinc suffered a similar fate several months ago when local tax rebates made deliveries to LME more profitable than selling into the market.
It is fair to say that zinc, copper and nickel production is increasing across the globe.
So too is demand.
And the battle lines are drawn at the point of imbalance.
Nickel is sensitive to stainless steel output. Recent orders have slowed, but demand is still robust.
We had an event horizon that showed a few months of strong nickel demand, and presently we have fog.
Hi Red, whats happening to Nickel really gives me confidence of what can happen to zinc (and evenlead maybe) later thsi year!
thx
MS
BREND
26th-February-2007, 09:47 PM
Hi Red, whats happening to Nickel really gives me confidence of what can happen to zinc (and evenlead maybe) later thsi year!
thx
MS
Hmm, a bit different.
There is a lot of zinc in China, zinc suppliers are just waiting for LME zinc price to rise much higher, then they export.
While for nickel, supply is really limited, but then again, there is not much demand at current price, consumers are not buying, only funds are buying. Do you call that a bubble?
YOUNG_TRADER
9th-March-2007, 11:08 AM
Quote
Nickel is clearly the “bull in the china shop”, as it surges forms strength to strength. We are currently at a new high of $43,000, up $1000/MT, and are looking for another two days of closes above $42,200 (the recent intraday high) before adjusting our trading bands higher.
Sooner or later, steel manufacturers will have to start buying nickel again won't they?
I mean they need to galvanize the steel so it doesn't rust, how long can they continue to draw from their own stockpiles?
Kauri
9th-March-2007, 11:14 AM
Quote
Nickel is clearly the “bull in the china shop”, as it surges forms strength to strength. We are currently at a new high of $43,000, up $1000/MT, and are looking for another two days of closes above $42,200 (the recent intraday high) before adjusting our trading bands higher.
Sooner or later, steel manufacturers will have to start buying nickel again won't they?
I mean they need to galvanize the steel so it doesn't rust, how long can they continue to draw from their own stockpiles?
The picture is the same but Nickle = stainless.. Zinc = galvanising..
rwkni1
9th-March-2007, 11:16 AM
Article in todays AFR suggests CVRD's Goro project may now be in doubt.
If Goro didn't go ahead or was delayed further that could leave a huge gap in nickel supply expected to come on in 2008. More good news for prices i guess.
doogie_goes_off
9th-March-2007, 12:05 PM
Then look out for small nickel producers - Newbies AGM and Return by FXR
exgeo
9th-March-2007, 12:46 PM
Perhaps also Metals X, MLX as well. Not in production, but doing a lot of drilling out in the Musgrave of WA. Has added spice in the form of being a Tin producer.
happytown
9th-March-2007, 12:59 PM
and while we're at it, why not THX, in a 40/60 jv with SMY
"Copernicus Resource increases to 852,000t ore at 1.24% Ni following completion of major RC drill programme;
Copernicus open pit and underground resource now contains 10,600t Ni, 6,100t Cu and 370t Co;
Open pit mining could commence late 2007/early 2008 subject to granting of mining lease and receipt of all statutory approvals
Copernicus is a small magmatic Ni-Cu-Co sulphide deposit located 35km south of the Sally Malay nickel mine"
from SMY ann 29/01/07
cheers :)
BREND
9th-March-2007, 05:23 PM
More on nickel:
http://basemetal-trading.blogspot.com/2007/03/nickel-sprints-beyond-43000-in-lme.html
rederob
13th-March-2007, 11:43 PM
Kauri
Remember what copper did last year: It went higher and higher and higher hitting an RSI in the high 80s and holding for days.
That happened some months after coppers inventory had bottomed.
Nickel inventories remain near historical lows, with the proportion of cancelled warrants representing about 40% of total LME metal.
So although I agree we are very close to that blow off, we could still be weeks away.
Definitely not a market I would touch with the proverbial barge pole
at present.
Kauri
If you are still awake..........
With $45k now under nickel's belt, the blow-off is nearer than ever.
Should it occur, I will re-enter SMY if the price correction is severe enough - I reckon a fair bit needs to come off its top as its forward pe does not represent decent value for a producer in this (crazy nickel) market.
Kauri
14th-March-2007, 12:54 AM
Just rumours at the moment...
LONDON (AFX) - Leading shares turned lower in opening deals as vague talk a UK hedge fund has hit financial trouble dragged on financials and added to jitters ahead of key US retail data, dealers said.
Back in London, financials led the broader market lower following rumours a UK hedge fund is facing financial difficulties.
'The market is being hit by talk that a UK hedge fund is about to go bust,' one London based trader noted.
'We've nothing concrete and don't know if it's commodities related or not.'
chops_a_must
14th-March-2007, 01:18 AM
With $45k now under nickel's belt, the blow-off is nearer than ever.
Should it occur, I will re-enter SMY if the price correction is severe enough - I reckon a fair bit needs to come off its top as its forward pe does not represent decent value for a producer in this (crazy nickel) market.
I hope not. My 20c coins that were a few weeks back worth 19c, still have a way to go IMO. I'm hoping they will become worth a little bit more Lol! Watch for the mint announcing that they are melting down this years coins soon. If so, put all the 2006 and 2007 5 cent and 20 cent coins you can find in a jar and keep them.
After all, the round 50cent coins from between 66 and 68 can now be bought at spot for about $5 US. Look for copper coins to make a comeback in the form of 5, 20 and possibly 10 cent coins.
Personally looking at MCR and MRE if a correction occurs. Just prefer them to SMY.
michael_selway
15th-March-2007, 08:14 PM
Kauri
If you are still awake..........
With $45k now under nickel's belt, the blow-off is nearer than ever.
Should it occur, I will re-enter SMY if the price correction is severe enough - I reckon a fair bit needs to come off its top as its forward pe does not represent decent value for a producer in this (crazy nickel) market.
EPS(c) PE Growth
Year Ending 30-06-07 37.5 10.8 209.4%
Year Ending 30-06-08 77.5 5.2 106.7%
thx
MS
SMY ramp up will see those forecasts move forward and if Nickle holds up surpassed.
If SMY does pullback a decent amount (IMO thats a perfect entry), their hedge is fully delivered through increased IC tonnages in 07/08. Dividends in succesive years short term will be outstanding.
Forward growth wise SMY have nailed the monkey for 07 and are cashed up to take advantage of their unexpected exploration hits.
If Nickle spot blows off.......theirs no reason to think 30k a tonne wont trend for a while yet and at that SMY is still a cash cow.
