May 08 2014 LONDON (Scrap Register): Bank of America Merrill Lynch has raised its this year nickel price forecast by 10% to $17,735 per metric ton, citing a favorable fundamental backdrop and suggesting new ore-processing facilities in Indonesia may not be up and running until 2017.

According to BofAML, the Indonesian government in January banned exports of ore, wanting to see more processing within the country.

Against this backdrop, analysts at BofAML said "we are now marking-to-market" their 2014 nickel price forecast by 10% to $17,735 per metric ton, or $8.05 a pound, while upgrading average 2015 price expectations by 33% to $23,836 a ton, or $10.81 per pound.

Analysts said nickel could trade as high as $25,000 a ton, or $11.34 a pound, in the next year.

The Indonesian government appears to have been successful in attracting foreign investment for downstream production, with several nickel pig iron projects in the pipeline, Bank of America Merrill Lynch points out.

"As such, we believe it unlikely authorities would legalize nickel exports at this junction. Some of the Indonesian NPI projects may not come online until 2016, suggesting annual average nickel prices may not correct meaningfully before 2017," BofAML added.