PERTH (miningweekly.com) – Nickel prices on the London Metals Exchange (LME) were expected to average at $20 000/t in 2015, owing to an expected shortfall in new production, coupled with a ban on ore exports from Indonesia, financial adviser Alto Capital reported at the Paydirt Nickel conference.
Nickel prices traded at a six-month low of $16 095/t on Thursday, as the LME reported record inventories in nickel stockpiles.
Alto senior analyst Carey Smith said in Perth, on Thursday, that while the LME stockpiles were currently at record highs, this was expected to drop off during the remainder of the year as nickel pig iron (NPI) supply from China dried up.
China’s production of NPI is estimated to decline to 350 000 t this year, from the 500 000 t the country produced in 2013. By 2015, NPI production was expected to reach only 200 000 t, which Smith pointed out would leave a 300 000 t shortfall in China’s NPI production.
“This shortfall will drive the need to source additional nickel feed, and this, in turn, will drive the LME stockpiles down, and they will decrease going forward,” Smith said.
Meanwhile, Smith pointed out that delays in new nickel projects would result in a three- to six-year delay for new production to come on line, which combined with Indonesia’s recent ban on nickel exports, would further drive nickel prices.
“The new projects will partially offset the NPI shortfall, but the one plus is that any new laterite project is unlikely to be built within the next decade,” Smith said, pointing out that the capital costs for these projects had more than doubled, with investors proving hesitant to back these projects.
“These types of projects are off the table for at least 10 to 12 years,” Smith said.