Reuters reported that nickel premiums in Europe could see a recovery early 2012 say some traders and producers who expect recently eased bank reserve requirements in China to help spur demand for raw materials.
A source at a nickel producer said that "The Chinese government has just eased the lending regulations for its banks so we could see a bit of a pick up in January 2012 if we stay at these levels."
In November 2011, for the first time in three years, China's central bank cut reserve requirements for commercial lenders, shifting policy to ease credit and shore up the economy.
Spot nickel is currently seeing support from some buying from Chinese stainless steel mills, the country's top nickel users, as nickel pig iron producers struggle to compete in the wake of the refined metal's recent falls.
Premiums for cut NI-RDM-CT and briquette NI-RDM-BRQ nickel in Rotterdam, paid over the LME cash price, were both quoted at USD 250 to USD 300 a tonne, largely unchanged from previous weeks, while full plate NI-RDM-FP was quoted slightly higher at USD 100 to USD 125.
Premiums for base metals have come under pressure in recent months as uncertainty about Europe's economic growth and its knock on effect on the global economy has raised fears about the demand outlook.
A physical nickel trader said that "We expect to see fairly strong Chinese buying as we go through the year and it (China's move to lower bank requirement ratios) should help ease the situation."
Three month nickel on the London Metal Exchange hit a 23 month low of USD 16,550 in late November 2011. It is down almost 26% year to date, making it the worst performer in the base metal complex after tin.
The industry source said that "Nickel at USD 18,000 a tonne is quite a low number for a lot of nickel pig iron producers in China to compete with so there is some support coming from there. But at the same time, some of the producers are using higher technology so they have a lower cost price."
China's imports of refined nickel and alloy in the first 10 months of the year at 179,518 tonnes were up 15.64% on the year.
Mr Nic Brown, head of commodity research at Natixis, said that "There is a whole spectrum of different forms of nickel, with a large amount of scrap and stainless steel scrap in the middle, which people will be shifting through as they're getting closer to refined nickel. We're not at all surprised that nickel has bounced around this (USD 18,000 a tonne) level and appears to be experiencing some support around these levels."
(Sourced from www.reuters.com)
