Nickel Glut to Continue into 2014, Says Morgan Stanley

Bloomberg reported that the worldwide nickel glut will continue into 2014 as new technology allows Chinese furnaces to produce record amounts of nickel pig iron at a low cost, as per Morgan Stanley.

As quoted in the market news:

China expanded NPI output from 3,000 tons in 2005 to make the stainless steel needed for its construction boom after costs for pure nickel reached a record $51,800 in 2007. While slumping prices previously shut furnaces in China and curbed excess supply, the new technology means they can now compete with traditional refineries. The cumulative surplus since 2007 will have reached about 589,000 tons by the end of 2014, or almost four years of U.S. demand, Morgan Stanley says.

‘Most traditional nickel producers cannot compete on price and are having to close or scale back operations,’ said Gavin Wendt, the founder and senior resource analyst at Sydney-based Mine Life Pty., who has followed the mining industry for more than two decades. ‘The biggest factor damping prices at present is the increasing level of China’s production of NPI.’

Click here to read the full Bloomberg report.