Overcapacity to Weigh on Nickel Prices in 2013-Shanghai Metals Market

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Overcapacity to Weigh on Nickel Prices in 2013

SMM Insight 03:51:33PM Jan 07, 2013 Source:SMM

SHANGHAI, Jan. 7 (SMM) – Market share for nickel was eroded in 2012 due to the global nickel oversupply and technical upgrade for NPI segment, and the weakening demand caused LME nickel prices to perform the worst among base metals. With a huge number of new NPI capacities coming online, global nickel supply should remain in surplus in 2013 and weigh on nickel prices.

The European debt crisis and China’s economic slowdown in 2012 whittled down any growth in nickel demand. According to International Nickel Study Group, global nickel market was in surplus by 55,600 tons in the first ten months of 2012. World Bureau of Metal Statistics also reported that the nickel market was in surplus of 81,000 mt during January to October 2012. In this context, nickel prices remained low and the increase in nickel inventories also outstripped those for other metals.

Despite the excess supply, nickel producers both at home and abroad were still building new projects. In China, Shaanxi Huaze Nickel & Cobalt was reportedly planning to add nearly 20,000 mt/yr ion capacity in 2H 2013. Ni&Co Guorun New Materials has completed construction of its new power station, laying groundwork for its capacity expansion. Jinchuan Group’s 60,000 mt/yr nickel projects completed by the end of 2012 helped the company to achieve 200,000 mt/yr in its nickel capacity. In foreign countries, Sherritt’s Ambatovy project produced 2,370 mt of nickel in 3Q 2012, and its nickel output is expected to hit 60,000 mt when the project reaches its full capacity. The first production line of Xstrata’s Koniambo project is also planned to start production in January 2013. Xstrata plans to raise the annual nickel output of Koniambo project to 60,000 mt in two years. Sumitomo Metal Mining will finish its 50,000 mt/yr Taganito project in the Philippines in 4Q 2013, with its nickel capacity planned at 30,000 mt/yr.

Latest manufacturing data reflect that manufacturing and housing sectors in China, US and euro zone are still growing slow despite a sign of global recovery seen in late 2012. Therefore, global nickel demand may still lag behind nickel supply.

In addition, China will see massive NPI capacity expansion in 2013, combined with the adoption of new technologies in NPI segment, downstream demand for refined nickel will be further impaired. As such, nickel prices will remain under downward trend given the excess nickel supply in 2013.
 

Price

more
1# Zinc
Oct.18
18810.0
-10.0
(-0.05%)
0# Zinc
Oct.18
18880.0
-10.0
(-0.05%)
T/C for domestic zinc concentrate
Oct.01
6325.0
0.0
(0.00%)
T/C for imported zinc concentrate
Oct.01
280.0
0.0
(0.00%)
Zinc Alloy (Zamak3/ZX01)
Oct.18
19780.0
-10.0
(-0.05%)

Overcapacity to Weigh on Nickel Prices in 2013

SMM Insight 03:51:33PM Jan 07, 2013 Source:SMM

SHANGHAI, Jan. 7 (SMM) – Market share for nickel was eroded in 2012 due to the global nickel oversupply and technical upgrade for NPI segment, and the weakening demand caused LME nickel prices to perform the worst among base metals. With a huge number of new NPI capacities coming online, global nickel supply should remain in surplus in 2013 and weigh on nickel prices.

The European debt crisis and China’s economic slowdown in 2012 whittled down any growth in nickel demand. According to International Nickel Study Group, global nickel market was in surplus by 55,600 tons in the first ten months of 2012. World Bureau of Metal Statistics also reported that the nickel market was in surplus of 81,000 mt during January to October 2012. In this context, nickel prices remained low and the increase in nickel inventories also outstripped those for other metals.

Despite the excess supply, nickel producers both at home and abroad were still building new projects. In China, Shaanxi Huaze Nickel & Cobalt was reportedly planning to add nearly 20,000 mt/yr ion capacity in 2H 2013. Ni&Co Guorun New Materials has completed construction of its new power station, laying groundwork for its capacity expansion. Jinchuan Group’s 60,000 mt/yr nickel projects completed by the end of 2012 helped the company to achieve 200,000 mt/yr in its nickel capacity. In foreign countries, Sherritt’s Ambatovy project produced 2,370 mt of nickel in 3Q 2012, and its nickel output is expected to hit 60,000 mt when the project reaches its full capacity. The first production line of Xstrata’s Koniambo project is also planned to start production in January 2013. Xstrata plans to raise the annual nickel output of Koniambo project to 60,000 mt in two years. Sumitomo Metal Mining will finish its 50,000 mt/yr Taganito project in the Philippines in 4Q 2013, with its nickel capacity planned at 30,000 mt/yr.

Latest manufacturing data reflect that manufacturing and housing sectors in China, US and euro zone are still growing slow despite a sign of global recovery seen in late 2012. Therefore, global nickel demand may still lag behind nickel supply.

In addition, China will see massive NPI capacity expansion in 2013, combined with the adoption of new technologies in NPI segment, downstream demand for refined nickel will be further impaired. As such, nickel prices will remain under downward trend given the excess nickel supply in 2013.