Nickel climbs to 3-month high on LME

Print this page Posted on : 02-29-2008 by recycleinme.com

London Metal Exchange nickel prices hit a three-month high Thursday following news that workers at the Colombian Cerromatoso nickel mine owned by Australian mining company BHP Billiton Ltd. (BHP) started a strike.

The price rise is likely to be a knee-jerk reaction as the market is well supplied and selling is expected as the metal moves closer towards $32,000 a tonne, market participants said.

As of 1246 GMT LME nickel was trading at $30,450 a tonne, up 4.3 per cent from Wednesday's kerb close.

Cerromatoso exported 114,000 tonnes of nickel in the first 11 months of 2007. Unions and the company have failed to reach an agreement on new labour agreements.

It is, therefore, a significant contributor to world nickel supply, said Fairfax analyst Mr John Meyer. ''This has no doubt helped push up nickel prices further, as well as investment money into commodities,'' Mr Meyer said.

If this mine and smelter stays down for a protracted period of time it could affect the global supply and demand balance, especially if the South African by product output is affected materially by power strikes, said JP Morgan analyst Mr Michael Jansen.

LME inventories are at their highest level since the late 1990s, pig iron capacity will become more attractive with a move back through $32,000/tonne, and demand from stainless steel producers remains relatively anemic as the industry recovers from poor demand in the second half of 2007,

Source : Business Line