Nickel Price Trends

By Vivien Diniz – Exclusive to Nickel Investing News

It has been an eventful year for the price of nickel. The metal witnessed a rise in price early in the year, followed by its highest price since the fourth quarter of 2008 when the price of nickel reached about US$27,500/mt. Since April, the metal has seen a sharp decline in its price, but has recovered nicely, sitting today at around US$24,695/mt.

As a crucial component in the hardening of steel, the demand for nickel runs hand in hand with the steel industry. As such, the voracious appetite for urbanization from emerging nations such as China and India has elevated the demand and production of steel for 2010. The desire for steel has resulted in a heightened demand for nickel as well as edged its price higher on the charts.

This year the nickel market experienced a deficit of approximately 6,800 tonnes over the course of the first ten months. However, it did nothing to soften production rates as mine production was up 4.5 percent or 1,190.1 kt from January to October by in comparison with the same period of 2009.

With all the cravings for steel, nickel forecasts are hopeful. The expectation is that nickel prices will set output rates into high gear. Australian nickel ore production is anticipated to climb to about 172,000 tonnes from previous totals from 163,000 tonnes in 2009. With nickel production prospects mounting, Thundelarra managing director Brett Lambert told Australian Mining that “the future bodes well for nickel.”

On December 10, ETF Securities introduced the first copper, nickel and tin exchange-traded-products on the London Stock Exchange. The emergence of these ETFs is expected to help raise prices and strengthen market sell-offs. However, market analyst for Desjardins Securities John Redstone believes that while these ETFs are apt to increase the market metals’ volatility, he does not think that they can fight the fundamentals. “In a surplus market, ETFs will not absorb the surplus supply. The additional demand ETFs provide should only affect the price when demand is already outstripping supply,” Redstone stated in a research note.