London — For the nickel market, 2014 may prove to be a turning point when vitality is restored to an industry that saw prices dip below US$14,000/t in July 2013. At this level, not seen since 2009, an estimated 30 per cent of operations were believed to be unprofitable, as demonstrated by numerous suspensions and closures in Australia and at other high-cost operations. As PMI indices, macroeconomic indicators and growth forecasts turned more optimistic, downward price trends reversed in the second half of 2013 – a reversal that is expected to be sustained.
In China, rotary kiln electric furnace (RKEF) technology has lowered NPI production costs by around 25 per cent, but also serves to increase demand for high-grade nickel ore, sourced mostly from Indonesia. Following the ban in Indonesia on raw material exports, prices in the middle of January experienced a rally. However, stockpiles of lateritic ore in Chinese ports, combined with stocks held in producer, consumer and LME warehouses provide partial insulation from this supply shock. Furthermore, nickel supplies are relatively price-elastic, with increases in price expected to result in increased output from operations that for much of 2013 operated under marginal conditions.
Much more information on the nickel market can be found in the 2014 Roskill report on „Nickel: Market Outlook to 2018“ under roskill.com.
Source: Roskill Information Services Ltd.