Friday, October 24th1.1°C
23840
23004

Scotiabank raises outlook for price of nickel following Indonesian export ban

OTTAWA - Scotiabank is raising its outlook for the price of nickel — a key component in stainless steel — following an Indonesian export ban on unprocessed ore that took effect earlier this year.

Nickel prices have been rising following the Indonesian ban that was enacted in an attempt to encourage foreign investment in ore processing in the country.

"While the export ban was announced more than four years ago with an unchanged starting date of January 2014, few market observers, including ourselves, believed that Indonesia would have the resolve to stick with this agenda," Scotiabank said in a report Monday.

"However, after three months and no signs of the ban being eased or watered down, the nickel market has begun to panic, with prices moving up sharply."

The bank said it now expects nickel to average US$7.66 per pound this year, up from earlier expectations for US$6.75. Scotiabank also raised its outlook for 2015 to US$9 from US$7 for 2016 to US$10 from US$7.50.

The price of nickel was US$6.82 per pound last year.

The upgraded outlook for nickel by Scotiabank came as Toronto-based Royal Nickel Corp. (TSX:RNX) said it has bought a 25 per cent stake in Sudbury Platinum Corp. for C$1.5 million.

SPC, a private subsidiary of Transition Metals Corp., holds an option to earn up to 70 per cent of the Aer-Kidd nickel-copper-platinum group metals project in Sudbury.

Mark Selby, interim president and CEO of Royal Nickel, said the price of nickel could return to levels last seen in 2006-07 when it went for $15 to $20 per pound.

"Now that the market is realizing this Indonesia ban, as we said, will remain in place, we're already seeing nickel prices bid up from the lows of $6 a pound," he said Monday.

Selby said the company is seeing signs in China — a key producer of stainless steel — that prices are on the rise.

"The port inventories have already dropped by six million tonnes in just two months," he said.

"Outside of China we're seeing also a number of very strong signs that the global nickel and stainless markets are improving."

CIBC estimated that Indonesia accounted for about one-third of the world nickel mine production last year and that a strictly enforced ban could remove 40 million to 50 million tonnes of nickel ore from the market.

CIBC conceded that earlier this year it thought the ban could eventually lead to a nickel shortage, but did not expect a meaningful impact on prices until 2015.

"With a current spot nickel price of US$7.90 per pound. the market dynamic has clearly changed," CIBC said.

"We are now learning that nickel ore prices in China are climbing and FOB prices for Philippines nickel ore are also on the rise."

However, both Scotiabank and CIBC cautioned that if Indonesia does soften its ban, nickel prices could slip back to their previous levels.

"We have already read about media speculation about some movement on a possible reduction of copper concentrate tariffs in Indonesia, so anything could happen with respect to nickel," CIBC said.

The Canadian Press


Read more Business News




Recent Trending




Today's Market
S&P TSX14494.01+7.18
S&P CDNX806.00-2.60
DJIA16715.8937.99
Nasdaq4467.284+14.492
S&P 5001954.84+4.02
CDN Dollar0.8909+0.0005
Gold1232.60+3.50
Oil80.82-0.93
Lumber335.00+5.40
Natural Gas3.581-0.041

 
Okanagan Companies
Pacific Safety0.105-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.14-0.03
Cantex0.0550.00
Anavex Life Sciences0.195-0.003
Metalex Ventures0.045+0.005
Russel Metals33.10-0.06
Copper Mountain Mining2.04-0.04
Colorado Resources0.14-0.005
ReliaBrand Inc0.012-0.001
Sunrise Resources Ltd0.05-0.01
Mission Ready Services0.41+0.005

 





FEATURED Property
2103699#119, 4450 Gordon Drive
$598,395
more details
image2image2
Click here to feature your property
Please wait... loading


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...


We can get on together

I was in LA this week. I witnessed such crazy and unusual circumstances as I strolled along Hollywood Blvd and Sunset Blvd. A far cry from sleepy Peachland in the Okanagan! The strange thing was, I f...


Weakening global growth worries

The Big Picture Growth worries persist Worries about weakening global growth and its potential impact on the US economic recovery roiled markets around the globe this week. Europe continues to be the ...

_








Member of BC Press Council


23091