Wednesday, July 14, 2010

Nickel Prices Could Soar on Strong Demand, Low Supply

Prices for nickel could explode this year as demand may exceed supply by up to 40,000 metric tons in 2010, according to Sumitomo Metal Mining Co. of Japan.

Sumitomo's estimate is based, as with most other raw materials, on the demand from China, which is anything but certain at this time, especially with their efforts to cool their hot, urban property markets, which would have an impact on nickel demand.

Nickel is important in housing because about two-thirds of it is used as an anti-corrosion element in making stainless steel, which is used heavily in buildings and homes.

The question is how much demand from China falls, and how that differs in relationship to supply issues. Sumitomo believes the supply won't be able to keep up with demand, and that could raise the price of nickel substantially.

Supply disruptions in Canada have been another factor, but strike by workers in Canada is over against Vale SA, and that should ramp up supply, but it's questionable as to how much for the remainder of the year.

Toru Higo, general manager of the company’s nickel sales, noted China demand could surge by as much as 18.6 percent to about 510,000 tons.

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