Nickel - Major Correction, where to next ?

[Lizard]

IGO quarterly looked good to the market Tricha...currently $3.10

I'm not much on resources, but got IGO at $1.20 (and some more in recent sell-down at $2.56). They just seem like such a switched on mining company - though the recent nickel price is certainly a bonus.

[nelehdine]

Agree Lizard ... this is a QUALITY company, definitely the best and most informative quarterly of all the mining stocks I own. Quality management, quality dirt ( Tropicana could be MASSIVE ) and in the right commodity ... I'm long 10,000 at 198 , ain't selling for the foreseeable ... lots of mileage left in this one.

[tricha]

Yes lizard and Nelehdine - IGO's quarterly certainly looked good to the market.

And like JBM, SMY, MCR, the next quarter is looking far better, WSA and AGM can only look on with envy and pray the price continues for a few more years.

FXR, what more can u say, they are sitting on one hot area.

BRW, they have a lot of catching up to do, but they do have a good cashflow.


Bring it on, the strike i mean.

Nickel Climbs on Stockpile Drop, Report of Strike at Inco Mine
July 28 (Bloomberg) -- Nickel futures climbed the most in two weeks in London after Reuters reported a strike at a mine operated by Inco Ltd., the world's second-biggest nickel producer, fueling concern about declining stockpiles.

Inventories monitored by the London Metal Exchange fell 8.6 percent today to 4,272 metric tons, the lowest since July 1991. Miners at Voisey's Bay, which is due to produce 54,000 tons of nickel contained in concentrate this year, stopped work after the United Steelworkers Union and Inco management failed to agree on a labor contract yesterday, Reuters said.

``At the moment, the market is very sensitive to the news,'' said Roy Carson, a trader at Triland Metals Ltd., one of 11 companies trading on the floor of the London Metal Exchange. The ``latest stock decline obviously caused this buying response.''

Nickel for delivery in three months rose $1,175, or 5 percent, to $24,875 a metric ton as of 10:33 a.m. in London, the most since July 17. The metal has gained 84 percent this year.

Voisey's Bay started in September 2005 and employs about 400 people, according to the mine's Web site. Inco spokesman Steve Mitchell in Toronto said he wasn't able to confirm or deny the report. Company spokesman Bob Carter at Voisey's Bay didn't answer a call from Bloomberg News requesting comment.

Copper headed for its biggest weekly gain in two months, rising $120 to $7,640 a metric ton, amid concern labor disputes and mine repairs may cut supply in Chile, the world's biggest producer of the metal.

Santiago-based Codelco, the world's largest producer of copper, may need as many as three months to repair its largest mine after a rockslide. Workers at BHP Billiton's Escondida mine are due to vote today on whether to strike next month. They are seeking a pay increase 13 percentage points above inflation. Management is offering 1.5 points higher than inflation.

`Far Apart'

Escondida, the world's biggest copper mine, is producing 40 percent less metal after miners began arriving later for work, union spokesman Pedro Marin said July 26. BHP denies that. Copper futures have risen 74 percent this year.

At Escondida, ``the two sides are far apart on wages issues, and it probably will come to strikes,'' said Albrecht Gohlke, a fund manager at Hauck & Aufhaeuser Privatbank in Munich. ``This will provide the impetus to drive copper prices higher.''

Among other metals on the LME, lead gained $20 to $1,090 a metric ton, zinc was $60 higher at $3,290, tin rose $25 to $8,375 and aluminum advanced $6 to $2,527.



To contact the reporter on this story:
Katy Watson in London at kwatson@bloomberg.net

[tricha]

Stainless steel cycle has turned, says Merafe
Source: Mineweb



See also
Stainless Steel Board
Stainless Steel CatalogMerafe Resources, which together with its partner Xstrata is one of the world's largest ferrochrome producers, expects prices to continue to rise as stainless steel enters a bull market. At Merafe's interim results presentation, financial director Stuart Elliot would not be pinned to an exact forecast, but says he does not expect the ferrochrome price to fall below its current $0.75 a pound in the next year and a half.

The current price of roughly R5.20 a pound is comfortably above one analyst's back of the matchbox break-even estimate for Merafe of between R3.50 and R4. Together with Xstrata, Merafe is the lowest-cost ferrochrome producer in South Africa, which is second only to Kazakhstan in terms of costs.

As expected, Merafe posted a loss of R0.0123 for the interim period to June 30 2006. But a 19% increase in the ferrochrome price to $0.756, coupled with a 16% slide in the rand during the third quarter of 2006 should push Merafe into profitability.

One of the reasons Elliot is bullish on ferrochrome is that stainless steel production appears to be on an upward trend. Ferrochrome's main use is in stainless steel, and as such, Merafe's fortunes are pinned to the cyclical market for corrosion-proof metal.

Elliot says that global stainless steel production ended a longer-than-usual bull market in the second half of 2005, resulting in a "steep correction" in prices, but that the bull trend appears to be back, with strong growth forecast to 2008.

"The second quarter of the year has seen a turnaround for the ferrochrome business. Stainless production has increased sharply, as service centres and fabricators returned to the market to replenish inventories and meet growing demand, particularly in Europe," says Merafe in its results commentary.

In the second half of 2006, Merafe's share in the Project Lion joint venture it has with Xstrata will increase to 20.5% of earnings, interest, tax, depreciation and amortisation, up from its previous 17.5%.

Project lion is a 360 000 tonne a year facility that will be commissioned in the second half of 2006. "Project Lion is expected to deliver significant cost savings compared to current industry averages, arising from improved efficiencies in energy, ore and reductant consumption. Ramp-up to full production is expected in the first half of 2007 and overall the project remains on budget, despite significant cost inflation for key inputs," says Merafe.

"The increase in the base price of ferrochrome from 63 USCents per pound in the first quarter of 2006 to 75 US Cents per pound in the third quarter of 2006, the weakening of the Rand against the US$, Merafe's share of EBITDA increasing to 20.5% from 1 July 2006 and Project Lion coming on-stream, should result in Merafe posting meaningful profits for the remainder of the financial year," it says.

Merafe features in the portfolios of two of South Africa's most successful money managers, Coronation and Allan Gray. In a recent interview with Mineweb Radio, Allan Gray portfolio manager Arjen Luchtenburg said the asset manager predicted the share to earn 10c a year over time, which made its price of 69c attractive.

The Merafe share price traded R0.02 higher after the results announcement, but later dropped back to the previous day's closing price of R0.65 a share.

[sparrow]

Who ... what.... to believe? But this article makes more sense to me , rather than the doom merchants predicting a dive in 2007 for nickel, ........unless someone comes up with a nickel substitute..


London nickel flirts with record on firm demand
Mon Aug 14, 2006 3:17 PM GMT



By Nick Trevethan

LONDON (Reuters) - Nickel came within $50 of its recent record high on Monday supported by demand from stainless steel makers who may have underestimated their needs for 2006.

Nickel for delivery in three months rose to $27,250 a tonne in midsession dealing on the London Metal Exchange (LME), versus $26,700 on Friday and last week's record $27,300.

"There is a genuine shortage of material and in this environment prices are likely to go higher," Bache Financial minerals strategist Angus MacMillan said,

He added that $30,000 was the obvious big number target.

"I wouldn't be surprised to see it there in the very near future."

South Korean steel producer POSCO Co. Ltd. on Monday dismissed a Wall Street Journal report that it held a loss-making short position of 10,000 tonnes of nickel on the LME and of an additional 20,000 tonnes in the physical market.

A POSCO official said the company was short by less than 1,000 tonnes on the LME, and denied the company had speculated on falling nickel prices.

Stainless steel production accounts for around two thirds of world nickel use.

"Regarding the 1,000-tonne short position on the LME, if they have to buy it back, then we might see a little more covering and firmer prices," a physical nickel trader said.

"They haven't taken on a physical short position, but they may not have covered their needs fully for this year,"

He said that most stainless steel makers had covered around 80 percent of their predicted 2006 nickel needs on long term contracts, but demand for stainless had picked and with it, nickel.

"...The sort of tonnage referred to may be what they need in order to fulfil orders," he said, and the company had two options -- to try and buy the additional nickel needed or to turn away orders.

Stocks of nickel in LME warehouses were 5,940 tonnes, of which nearly 3,600 tonnes have already been earmarked for delivery. Daily world nickel consumption is around 3,500 tonnes.

In addition to low stocks and strong demand, nickel prices are firm after a strike at Inco, which began shutting down production at the end of July at its 54,000 tonne-per-year, Voisey's Bay nickel mine in Canada.

COPPER GIVES UP GAINS

Copper gave up most of its earlier gains despite tightening supply in the biggest consumer of the metal and as a strike at the world's largest copper mine moved into a second week.

Copper was up $30 at $7,600 as talks resumed at the key Escondida mine in Chile between the union and majority owner BHP Billiton was down $43 at $2,477 and looked vulnerable to technically-driven selling, while zinc gained $10 at $3,280.

[tricha]

Yes it is looking great Sparrow, just out of curiousity, which nickel stocks do you own.

Wow, $40,000 a ton OZ for nickel right now, got to be some extreme numbers coming out for IGO, MCR, SMY, JBM, and others like Minara.
Bring it on.

AGM and WSA eat your heart out. Will their time come, lets hope so. no one can predict what will be in another year.


Nickel ¬ Aug 16, 09:25
Bid/Ask 13.9215 - 13.9216
Change +0.6048 +4.54%
Low/High 13.2487 - 13.9216

[Sid]

Nickel Soars, Prompting Metal Exchange to Impose Trading Limits
Aug. 16 (Bloomberg) -- Nickel prices climbed to the highest since at least 1987 as stockpiles dwindled, forcing the London Metal Exchange to impose trading restrictions for the first time in a year.

After nickel surpassed $29,000 a metric ton, twice its level at the start of this year, the LME ordered for delivery rules to be suspended because of shortage of the metal. Inventories have plunged 83 percent in the past year.

``We now have a genuine material shortage,'' Simon Heale, chief executive officer of the exchange, said in an e-mailed statement today, explaining the exchange's decision.

The price of nickel, a metal used to make steel rust- resistant, is four times higher than the average of the 1990s because of a surge in demand from China. The high prices have led to a seven-week, $17 billion, battle for Inco Ltd., the world's second largest producer of the metal.

Nickel for three-month delivery advanced $1,645, or 6 percent, to $29,100 a metric ton as of 7:12 p.m. in London. Earlier, the contract gained as much as 6.4 percent, the most since January 2004.

The extra cost, or premium, paid for immediate delivery of the metal compared with delivery in three months more than doubled to $3,600 a ton, the highest in at least 11 years. Nickel stored in warehouses tracked by the LME has dropped to 6,162 tons this year, equal to less than two days of global use.

The LME ordered that holders of so-called short positions, or bets that prices will fall, can borrow nickel at no more than $300 a ton each day. The exchange last intervened in metal trading in August last year after hurricane Katrina left stockpiles of zinc stranded in New Orleans, pushing the metal to an eight-year high.

`Something Going on'

``There's certainly something going on and somebody has got large short positions'' in nickel, said Stephen Briggs, an analyst at Societe Generale, one of the 11 companies trading on the floor of the LME. ``It's a very tight market but the physical nickel market is rarely as tight as the LME market suggests.''

Posco, the world's fourth-largest steelmaker by output, said two days ago it had a short nickel position on the LME of ``less than 1,000 tons.'' The company commented after the Wall Street Journal's Asian edition reported it made wrong-way bets involving 10,000 tons of nickel. Posco has been scrambling to cover the positions and is being forced to roll them forward at ever greater expense, the newspaper said, citing unidentified metal market sources in London. The company said rumors of such a large position were ``groundless.''

Nickel producer Inco has been the focus of a takeover battle since June 26, when Phelps Dodge Corp. first bid for the Toronto-based company. Teck Cominco Ltd. and Brazil's Cia. Vale do Rio Doce subsequently made proposals, pushing the offer price to C$19.4 billion ($17.4 billion). Teck today withdrew from the race after failing to sell stock to finance its offer.

[sparrow]

Tricha wrote

"Yes it is looking great Sparrow, just out of curiousity, which nickel stocks do you own."

Had MCR since early "03, first bought at 28c,then 67c.

Had BRW since late '03.

[JBmurc]

should be a cracker of a day for my nickel stocks- AGM MCR
is certainly the metal of 06

[SEC]

quote:Originally posted by SEC

Since stainless steel producers have been able to put their prices up they have been starting to restock their alloy inputs. Should keep nickel's price around $7+/lb for a while.

SEC

Posted six months ago. To think I was gushing at Ni @ $7/lb. Now it's double that!!!! Never ever thought it would reach $14/lb, was happy for it remaining around $7, that price alone would have re-rated the MCR price from what it was in Feb. The Nico's haven't kept pace with the 100% increase in Ni prices, but will do in due course.

SEC (MCR IGO)