LME nickel prices have currently strengthened a pace to fall and LME nickel stocks as of February 25th 2009 came to 98,600 tonnes, which indicated a power to reach 104,000 tonnes as recorded in May 1995 and corresponded to 8% of the world nickel production.
LME nickel price for 3 month futures at March 2nd 2009 was USD 9,700 per tonne, fall by 15% for 2 months from the beginning of 2009. LME nickel prices have still inclined to fall further on a basic tone and an analyst has a view that the next resistant line for a fall of nickel price will be USD 8,850 per tonne.
In the course of these movements for LME nickel prices, it was informed from China that the Central Government of China is considering to stockpile nickel metal produced in China. However, the authorities concerned in Chinese Government so far did not confirm a plan to purchase nickel metal for stockpiling and the parties concerned in nickel do not evaluate this plan as a factor to sustain nickel price, having still maintained a basic tone to fall further.
As regards CNY 4 trillion of the emergent expenditure, which the Central Government of China has adopted as the measures to raise up Chinese economy, local governments of provinces and autonomous regions are planning various measures to encourage their economy and drawing on their resources in order to obtain necessary funds from the Central Government of China.
According to information from China spread over in the beginning of this week, the State Reserve Bureau of China is planning to purchase 30,000 tonnes of nickel metal from Jinchuan Nickel for stockpiling as one of the projects to rehabilitate the nonferrous metal industry of China.
Nevertheless, this is true that the activities to purchase excessive stocks of nickel, aluminum, zinc and copper for stockpiling in China have existed. The provinces, producing these nonferrous metals, are supposed to be now negotiating with the authorities on purchases of these metals for stockpiling. Owing to the reduced production of stainless steel in China for 2008, the situation of nickel in China has certainly become an oversupply and, in order to relieve the depression of nickel smelters in China caused by a sharp fall of nickel price, the reason to purchase nickel metal for stockpiling was informed in this time.
China produced 6.94 million tonnes of stainless steel in 2008, having decreased compared with that of 7.20 million tonnes in 2007 and nickel became an oversupply because of the excessive quantity of nickel supplied from nickel contained pig iron. Therefore, this aspect has put a substantial pressure on nickel price and there is a view in the market that nickel production in China for 2009 is anticipated to come to a similar scale to that for 2008.
(Sourced from TEX Report Limited)
