According to a Reuter's poll, refinery shutdowns and supply disruptions will lift the price of stainless steel material nickel by more than previously expected in 2011, but the ramp up of new mines and restart of others will boost supply and cap prices in 2012.
The survey of 41 analysts was carried out over the last three weeks, and not all contributors responded to all questions. The consensus of 37 forecasts showed the cash nickel price in 2011 would average USD 24,786 a tonne, up from USD 24,251 forecast in January. For 2012 the average of 35 forecasts was USD 24,000 a tonne, in the July survey.
Those compare with an average of USD 21,811 a tonne for the London Metal Exchange's cash contract in 2010. LME three month nickel was USD 23,825 at around midday as compared with USD 24,045 at the close.
Mr David Wilson analyst at Societe Generale said that "Many of the supply disruptions that afflicted the nickel market during the first half of the year are expected to ease in the second half."
The world's top nickel producer, Russia's Norilsk Nickel, said last week that it had restarted one of its idled Australian mines, Maggie Hays. The mine was mothballed in 2009 as the global financial crisis cut metals demand.
Western Areas, Australia's third largest nickel miner, is forecasting 2011-12 nickel production of 25,000 to 27,000 tonnes, not far below the bumper 32,222 tonnes in the previous year.
Despite the easier supply pipeline, Wilson did not expect the nickel market to be flooded with excess metal. The consensus of 19 forecasts showed a balanced nickel market this year, compared with a surplus of 1,000 tonnes predicted in the January survey, and a surplus of 30,000 tonnes forecast for next year.
Bank of America Merrill Lynch said that "We continue to be concerned about nickel's project pipeline, which could bring about a surplus next year. This is one reason we would use any persistent nickel price strength as a selling opportunity."
Lingering supply constraints are expected to lift tin prices to higher than was expected earlier this year, although increased production in China and Indonesia will narrow a deficit of the metal used in lead free solder.
The consensus of 22 forecasts showed the cash tin price would average USD 29,124 in 2011, up from USD 27,000 forecast in a January survey. For 2012, the average of 21 forecasts was USD 30,423. That compares with an average of USD 21,811 a tonne for the London Metal Exchange's cash contract in 2010.
(Sourced from www.reuters.com)
