PERTH (miningweekly.com) – Investment bank and advisory service Alto Capital has predicted that the $20 000/t nickel price was sustainable in the medium term, however, foreign exchange currency movements could unbalance the price strength.
Research analyst Carey Smith told delegates at the Paydirt Nickel Conference that 2010 forecast nickel consumption was 1,39-million tons, at an average price of $21 350/t, or $9,70/lb.
Smith said he expected incremental increases in consumption over the next five years, moving to 1,57-million tons in 2015, but still holding by then at around $20 000/t.
“These consumption and price levels should hold, provided the pockets of global recession do not turn into a global depression. All the future growth for nickel, however, over the next five years, will be in Asia,” Smith said.
He noted that China would lead this charge, having moved from an average 4,5% of global nickel consumption in the 1990s to more than 30% currently, reflected in the country’s 22% annual growth rates between 2000 and 2009 at a time when the rest of the world had a negative 2,4% growth.
“In this time, China moved to preferences for higher-grade nickel and pushed consumption to more than 350 000 t/y, overtaking Canada as the largest exporter of goods to the US - but it needs the US and European consumer markets to continue their spending levels to maintain nickel output.”
However, Smith noted that other Asian economies were matching that drawdown for this commodity, with Asia accounting for almost 65% of production by the second quarter of calendar 2010, up from 40% just ten years ago.
He added that the pace of consumption from Asia was also accelerating, with first half consumption this year already 44% higher than the comparable period in 2009.
“We are at a point where stainless steel production this calendar year is expected to reach an all-time record.”
However, Smith said that a currency war remained a threat to nickel price strength and supply as the commodity would suffer if nations sought to lower their currency to increase their competitiveness in the postglobal financial crisis period.