By Kishori Krishnan Exclusive To Nickel Investing News

The Euro has bounced back. London trade base metals on Friday were just that wee bit higher, with indicator charts registering the slow but sure climb of nickel.

Dow Jones reported that 3-month nickel ended the day at $9.40/lb, a new high for 2010 and a gain of 12 per cent for the week.

Just to go back a bit, from a high of $10.64/lb of the average annual price of 2006, and the $16.83/lb the following year, nickel dropped to the average annual price of $9.57/lb in 2008.

The price of the metal then slid further to $6.65/lb in 2009.

The International Nickel study group has predicted that world nickel production will rise to 1.44 million metric tons in 2010 from 1.28 million in 2009, a 12.5 per cent jump.

All of this is of course based on the strong purchasing power by by Asian stainless steel producers, especially those in China.

The consensus forecast for nickel’s LME price is $8.25/lb, up 24 per cent from the 2009 price. We are already above that quotation.

Incidentally, no inbound shipment has taken place at the largest warehouse in Rotterdam, since the first of the month. Another bugbear, cancelled warrants continued to plague the sector.

Reports indicate that inventories of nickel stored at the LME warehouses have slipped for a sixth consecutive time and are at 163,500 tonne level.

With the Chinese traders coming back to the market on Monday, analysts are adopting a cautious tone. With the Lunar New Year Holidays behind them, demand is bound to perk up.

Steeling up

With Nickel close to the $20,000 per tonne mark, the market is afloat with rumours of a surcharge in the offing by stainless steel producers.

Demand for nickel is predominantly driven by stainless steel production, which accounts for around two-thirds of total nickel consumption.

Reports indicate that base increases are expected to jump up for new deliveries from April, with similar signals coming in from the United States, where Universal Stainless has already jacked prices by 5 per cent.

Speciality steel provider Universal Stainless decided to hike the price on all stainless steel wire rod manufactured at its Dunkirk Specialty Steel LLC facility, effective with all new orders from March 1, 2010.

There are mirror increases in Turkey.

So, though demand for nickel might have slid for three consecutive years, a recovery in the global economy is set to percolate to increased consumption this year.

Market research firm Roskill has also forecast that nickel consumption will increase by around 7 per cent in 2010, clearly piggy-back riding on the increase in demand for stainless steel.

Stainless steel production is forecast to reach 27 Mt in 2010 (an 8 per cent increase year-on-year).

The commodities analysts at Commonwealth Bank are of the opinion that nickel price will adjust lower in the coming months, before recovering later.

With China eager to gobble up all the nickel and new mines coming on stream, the analysts have based their forecast on Vale’s Onca Puma operation in Brazil, and Goro on New Caledonia where the processing plant is now in its trial phase.

Ambatovy in Madagascar is also set to ensure 60,000 tonnes a year by late 2010. The re-opening of Ravensthorpe, formerly owned by BHP Billiton (BHP), now under the management of Canada’s First Quantum Minerals and the Highlands Pacific‘s (HIG) Ramu nickel-cobalt mine in Papua New Guinea, will all add to the market.

Company news

A turnaround has been reported by nickel miner Mincor Resources NL. Interim results show the company posted a net profit of $14.2 million for the six months to December last year, compared to a $22.7 million loss for the previous corresponding period when nickel prices slumped.

Mincor has increased its interim dividend to three cents per share, fully franked, from two cents per share for the same period in 2008.

Crowflight Minerals Inc (TSX:CML), a Canadian junior mining company that owns the Bucko Lake Nickel Mine near Wabowden, Manitoba, has closed a private placement of approximately C$ 11,552,000.

The company is focused on nickel, copper and platinum group mineral (PGM) projects in the Thompson Nickel Belt and Sudbury Basin.

Mineral resources development firm Heron Resources (ASX:HRR) is expanding its Kalgoorlie nickel project in Western Australia by another 35 per cent to 49400 tpy as it continues to look for a project partner.

The company has announced the results of a survey at the Rocky Gully nickel sulphide project located 80 kilometres north west of Albany in Western Australia.

The company is targeting proterozoic large-scale intrusive-related nickel sulphide deposits similar to the Nebo Babel nickel deposit in Western Australia.

Heron’s gold interests include the A1 Gold Mine in Victoria where it holds a two year option to purchase the A1 Gold Mine.