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Reuters reported that output cuts may have halted nickel’s downward price trend. However, a “sharp recovery” is not likely to be in store unless more miners stop producing.
Reuters reported that output cuts may have halted nickel’s downward price trend. However, a “sharp recovery” is not likely to be in store unless more miners stop producing.
As quoted in the market news:
Prices for the metal used to make stainless steel have crashed more than 40% since the start of 2015 on rising stockpiles and weak Chinese demand, leaving around 70% of producers losing money, according to consultants at CRU Group.
But cutbacks, at a time when demand is steadying, should boost benchmark prices on the London Metal Exchange, which recently hit 13-year lows at $7 550 a tonne. It is now around $8,525.
“While we have no growth in demand we will have a 7% fall in supply, driven mainly by a fall in production by the nickel pig iron producers in China,” said Jim Lennon, senior consultant at Macquarie.
“The issue is that the deficit has to be sustained for a number of years before you see any tightness developing.”
The market is expected to swing into a 31 000 tonne deficit this year and a 34 000 tonne deficit in 2017, according to a Reuters survey of metals analysts.
Macquarie said prices have to rise above $10 000 a tonne “or else closures in capacity will be enormous”.
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