The Sudbury Star reported that a strike by Steelworkers in Sudbury and other parts of Canada have done little to eat into stocks of nickel sitting in London Metal Exchange warehouses.

The market was unperturbed by the lengthy strike at Vale Inco's Sudbury operations as demand showed little signs of improvement and LME stocks again rose quite sharply. More than 3,000 Steelworkers in Sudbury and Port Colborne began a strike July 1st and steelworkers in Voisey’s Bay walked off the job August 1st.

It quoted a Reuter’s report as saying that the rising inventories are weighing on the market, especially as demand continued to disappoint and supply looked set to rise with new projects due to start up soon as well as the threat of idled capacity restarts is also casting a shadow over the market.

Analysts are disconcerted that stocks of nickel in London Metal Exchange warehouses have risen despite lengthy strikes at Vale's Sudbury and Voisey's Bay operations.

Analysts cite disappointing demand and rising Chinese production of nickel in pig iron as some of the reasons for the growing stockpile.

Mr Nick Moore, head of mining strategy at RBS Global Banking & Markets told Reuters that “Nickel has by far the worst fundamentals of any metals. LME inventories are at over 14 year highs, nickel in pig iron output is at full swing in China and there's a parade of new nickel mines coming on stream.”

Mr Moore also said that he is concerned about the idled capacity overhanging the market and saw nickel prices of USD 20,000 a tonne as a trigger point for restarts. He said some 300,000 tonnes or 21% of global nickel capacity lies idle.

Mr David Thurtell analyst with Citigroup was also worried by rising stocks. He said that “It is a concern when you think that the strikes at Vale’s operations should be taking out significant tonnages.”

Mr Angus MacMillan an independent consultant said he did not anticipate a huge pick up in demand from the key stainless sector and he expected stocks to continue to build in the coming months. He said that “The next big move for prices is on the downside, although it might hover around here for a while.”

Reuters said nickel operations in Sudbury, Russia, Guatemala, Zambia, Zimbabwe and China have either resumed are scheduled to resume in the coming months, that would affect the price of nickel and stockpiles.

Meanwhile, LME nickel stocks continued to build in September, ending the month at 120,912 tonnes, up from 116,268 tonnes the previous month.

They have continued to accumulate in early October and now stand at around their highest in 14-1/2 years.

At the end of September, LME inventories amounted to almost 37 days of demand.

(Sourced from thesudburystar.com)