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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 06/15/2007 : 20:31:03
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Nickel and doom - time to sell?
Jamie Freed | June 16, 2007
NICKEL finally appears to have lost some of its lustre.
The price of the stainless steel material has fallen 19 per cent since reaching a record high of $US51,600 a tonne on May 4. On Wednesday, it dipped below $US40,000 a tonne for the first time since March.
Nickel producers have begun to retreat from some of their recent share price gains as a result of the commodity price fall.
On Friday, Goldman Sachs JBWere analysts issued a note pondering "not if, but when do you sell nickel stocks?", given it was their least preferred commodity.
This year, the nickel price reached more than 10 times its 2001 level due to a global supply shortage spurred by delays and cost blowouts at laterite projects under construction. At one point, supply stocks on the London Metal Exchange were measured in hours rather than days.
But as a result of the commodity's high price, stainless steel manufacturers have begun to lower the amount of nickel in some of their products. China has rapidly increased the production of nickel pig iron made from imported low-grade laterite ores from the Philippines.
The pig iron option becomes economic once nickel costs more than $US10.50 a pound.
Goldman Sachs JBWere said it expected nickel prices to fall further and placed long-term sell recommendations on the nickel stocks it covers, including Minara Resources, Jubilee Mines, Independence Group and Western Areas.
But Clive Donner, the head of listed resources investment fund LinQ Capital, said he thought nickel was still a good commodity in which to invest.
He said only extremely marginal producers would be affected by recent price falls, and LinQ intended to hang onto its investment in Independence.
"We never ever look at these companies producing nickel or emerging nickel companies and value them at current prices," Mr Donner said.
Goldman Sachs JBWere noted there were risks to its sell call. It said Jubilee was likely to continue to have very positive exploration results and possible takeover appeal. Last week, Citigroup also noted Jubilee's potential strategic value to suitors such as BHP Billiton.
BHP did not enter the recent $C6.8 billion bidding war over Australia's third-largest nickel producer, Canada's LionOre. But it's believed the mining giant wants to hold talks with the victor, Russia's Norilsk Nickel, about the future of LionOre's West Australian assets.
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Fanaticism is doubling one's efforts, yet forgetting one's purpose.
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Canadian_Nickle
Penny Hoarding Member
Canada
938 Posts |
Posted - 06/19/2007 : 02:23:16
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The current price drop is obviosuly a reaction to LME stockpile numbers going up, but since they started going up the same day the LME changed regulations re: monopoly positions I don't know how real the stock gains are...
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"A nickel's nothing to scoff at."
C. Montgomery Burns
HoardCode0.1: M28/5CAON:CA5Ni35000:CA1Cu1200:CA100Ag345:
CA10Ag250:CA50Ag100:CA25Ag30:CA500Ag48:US100Ag20:CA1000Ag16
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
 Posted - 06/19/2007 : 07:24:56
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I always expected nickel to be a bumpy ride, but that is not making it any funner to watch. Nickel's 5 year chart looks very weak. There is no support until around $15 and the support at that level is not particularly strong. It would not surprise me at all to see nickel go straight to $15 from here. Hopefully it holds at $15 and then moves back up in a much more passive way from there. If it doesn't hold, the next support level is at $7.50.
That being said I have no regrets about buying nickels below spot prices. The only one that might regret it is the bank when I have to return all of those nickels because they drop below spot:)
Copper looks much more appealing to me at the moment. So for now my attention is focused there...
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 06/19/2007 : 16:32:48
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"But as a result of the commodity's high price, stainless steel manufacturers have begun to lower the amount of nickel in some of their products. China has rapidly increased the production of nickel pig iron made from imported low-grade laterite ores from the Philippines."
I have to wonder what the quality of such stainless steel would be like?
Nickel took a big hit a few months back. I recall back then reading on coinflation how it was below 100% of its melt value. If anyone wants, they might still be able to dig out some of those old threads here. So I'm not discouraged at all. Stay with this over the long term and not only will you not need to return them to the bank, you may want to start one of your own.
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Fanaticism is doubling one's efforts, yet forgetting one's purpose.
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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
Posted - 06/19/2007 : 16:40:25
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Charts are good
Charts and fundamentals are better
The demand for nickel isn't going away anytime soon.
Nickel substitutes are being pushed (reduced nickel content stainless steel) but price is, right now, pinching but not hurting the bottom line for producers.
China and to a lesser extent India want to move their countries forward, and that means more metal for building and consumer goods. That means all metals are going up or holding their own pricewise in the years to come.
I should have chosen "Cut-n-Paste" as a forum name, since that is what I do, mostly. |
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Nickel and doom - time sell?
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