Market and product

According to Societe Generale SA, nickel may rise 14% in the fourth quarter as higher stainless steel production in China drives a gain in usage.

Mr David Wilson director of metals research at Societe Generale in London said that nickel for immediate delivery will probably average USD 26,835 a tonne in the next quarter as compared with the bank's estimate of USD 23,500 for the current period. China's stainless steel output probably will climb at least 25% in 2010.

He added that "Prices above USD 24,000 a tonne by the end of September are quite likely. Manufacturers of stainless steel are seemingly gearing up for higher production in China. Prices partly reflect rising nickel costs, but the key point is if there wasn't consumption, it would be difficult to pass on any price rises."

Mr Wilson also pointed to higher production of nickel in China as signaling improved local demand. Output was 18,043 tonnes in July, up 1.4 % from June and 25% higher than at the start of the year. He added that Chinese production of stainless steel probably will climb to more than 11 million tonnes this year from 8.8 million tonnes in 2009.

Barclays Capital estimated in a report on August 13th 2010 that European nickel consumption also will probably increase for the rest of the year as mills resume production after maintenance work. China will use about 31% of the world's nickel this year and Europe will consume about 25%.

(Sourced from www.bloomberg.net)