Sorry, Nickel Miners – Here’s Why Prices Are Near 2009 Lows
MetalMiner | Sep 08, 2015 04:01AM ET
pointed out recently : The pressure is on Chinese stainless producers to curb production and, although recent purchasing managers index data is encouraging for the US and Europe, growth there is unlikely to exceed the drop in Chinese demand.
With large inventory of nickel ore, of refined metal on exchanges and adequate supply of ferro-nickel, there doesn’t appear to be a strong argument for nickel prices to rise anytime soon.
Prices Are Just Information
Pundits have been suggesting that prices will rise since current prices are below the cost of production. And yes, we agree with them. The cure for low prices is always lower prices. Long-term, this causes the supply business to be less attractive, changing the supply & demand equation.
However, when will prices start reacting? That’s something that we can’t predict at this point. The truth is that investors are fearing a slowdown in China and while nickel is in the same elevator with the rest of base metals, it’s hard to tell on which floor they will get off.
In this extremely volatile market, the best thing buyers can do is to forget about predictions: Have a strategy and react on new market signals.
by Raul de Frutos
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