Demand for nickel scrap lost its luster among offshore buyers in January, sinking to its lowest level in more than three years. Nickel prices have rallied as much as 14 per cent since the start of the month, but are likely to remain volatile. Analysts predict gloomy prospects for nickel, given the enduring downturn in the stainless steel market, the main consumer of nickel.
On Monday, MCX Nickel prices fell by 0.66 per cent in futures trade today on the back of heavy selling both in the domestic market and abroad. Nickel for the May-month contract fell by 0.66 per cent to Rs 634 per kg in trading of 250 lots. A similar weakening trend was extended to the April month contact, which moved down by 0.62 per cent to Rs 628.00 per kg in trading of 1,475 lots. On the London Metal Exchange nickel declined from its 2007 high of $50,000 per tonne to hit a low of $9,000. Nickel’s Q1 2009 rebound has meant the nickel is currently selling for $12,425, cash buyer. The current price level is low enough that miners are still struggling, and we can expect more industry cutbacks.
Cia. Vale do Rio Doce, the world’s biggest iron-ore producer, has some explaining to do to the Canadian government. On April 16, Vale announced that it will shut its nickel mining and processing operations in Sudbury, Ontario, for eight weeks beginning June 1. Canadian Industry Minister Tony Clement said yesterday he wants Vale to explain how the curtailment doesn’t violate company commitments from 2006, when the miner agreed to purchase Inco Ltd., previous owner of the Sudbury operations. “We expect that they would have questions and we’re going to respond,” Cory McPhee, a Toronto-based Vale spokesman, said today in a telephone interview. “Unforeseen circumstances were taken into account and these are market conditions that demand this type of action.” Vale completed the purchase of Inco in 2007 to become the world’s second-biggest nickel producer after Russia’s MMC Norilsk Nickel.
Cuba’s three nickel processing plants remain open despite low international prices. Cuban Vice President Jose Ramon Machado Ventura warned earlier this month that nickel prices were on the verge of making the island’s most important export industry unprofitable. The Caribbean island is one of the world’s largest nickel producers and supplies 10 per cent of the world’s cobalt, according to Cuba’s Basic Industry Ministry. Nickel has accounted for more than 50 per cent of export earnings in recent years, not including services. Cuba’s National Minerals Resource Center has reported that eastern Holguin province has 34 per cent of the world’s known reserves, or some 800 million tonnes, of proven nickel plus cobalt reserves. The center says the region holds an additional 2.2 billion tonnes of probable reserves, with lesser reserves in other parts of the country.
Xstrata Plc, the world’s fourth- biggest nickel producer, plans to shutter its Sinclair mine in Western Australia in August because of plunging prices. “Subject to there being no sustained improvements in the market conditions, the mine will be put on care and maintenance,” Wayne Groeneveld, general manager of sustainable development at Xstrata’s Australian nickel unit, said today. Xstrata won control of Sinclair, which began production 10 months ago, through its A$3.1 billion takeover of Jubilee Mines NL in February last year. “Frankly, it’s pretty amazing that Sinclair is shutting down because it’s showing the decline in nickel prices is eating all the way down into relatively low-cost” producers, Alex Passmore, head of metals and mining research at Patersons Securities Ltd. in Perth, said today by phone. “Xstrata paid a lot for Jubilee, it was a top of the market acquisition.”
Minara Resources’ nickel output in the March quarter was steady at 7762 tonnes, almost unchanged on the same period last year. The Perth-based miner said output at its 60 per cent-owned Murrin Murrin plant in Western Australia operated consistently, with a small planned maintenance shutdown in the acid plant during the quarter and some additional remedial maintenance work. The plant is a joint venture with commodities trader Glencore International AG, which holds the remaining 40 per cent of the operation. Production guidance for Murrin Murrin for the year remains unchanged at 30,000 to 34,000 tonnes, Minara said in a statement.