Nickel Is Set to Decline on Lower Chinese Imports, CRU Says

LONDON, Sept. 18 -- Nickel is set to decline in coming weeks as China, the world's biggest consumer, imports less of the metal after building up stockpiles, researcher CRU said.

    Imports into China probably will fall in the fourth quarter because domestic production has kept the local market supplied, Maartje Collignon, an analyst at CRU in London, said by telephone. The Asian nation has estimated stockpiles of nickel totaling 140,000 metric tons, she said.

    Nickel for three-month delivery on the London Metal Exchange has slid 19 percent from this year's high of $21,325 a ton on Aug. 13. The metal, used mostly to make stainless steel, rose $551, or 3.3 percent, to $17,301 a ton at 1 p.m. local time today, helped by concern about inflation and a weaker dollar.

    "There are massive nickel stocks in China," Collignon said. "There is more weakness for the price of nickel during the second half of September and October."

    Chinese imports of refined nickel jumped 84 percent to 218,252 tons in 2009's first seven months, according to CRU. The country's output of stainless steel, the source of two- thirds of local demand, rose to a record 2.25 million tons in the second quarter, according to data from CRU.

    "Even though we are seeing stainless-steel production going through the roof, underlying demand has not picked up as much as those figures might suggest," Collignon said.

    Smaller Surplus

    World supply of nickel will exceed demand by 38,800 tons this year, 40 percent below CRU's previous 65,000-ton estimate, according to the analyst. The market was in surplus by 104,000 tons last year.

    "It seems like China has single-handedly more or less absorbed most of the oversupply in the nickel market in the first half of this year," Collignon said.

    Nickel for immediate delivery will average $15,000 a ton this year, she predicted. The price will rise to $15,500 a ton in 2010, when the market will be in surplus by 45,000 tons, according to Collignon.

    "We don't think there is significant scope for improvement in prices until the end of our forecast period 2013-14," she said.

    (Source: Bloomberg)