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Nickel prices set to fall because there is too much metal available

Date: Mon, 13 Jun 2011

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A global surplus of 12,000 tonnes of nickel is set to rise to 60,000 tonnes in 2012 according to Bank of America Merrill Lynch.

A survey by Bloomberg of 17 analysts and traders suggests that the metal may fall by 12 per cent to $20,000 per tonne by the end of this year.

JP Morgan Chase & Co fund manager Ian Henderson, who manages its Global Natural Resources Fund, said: “I’m not particularly optimistic about nickel. I don’t think there is a commercial logic for the price where it is today. A nickel price of $15,000 is entirely possible.”

New nickel mines are coming on stream, which is adding to the surplus of the material in the market. While Ikea, the biggest home furnishing retailer in the world, has announced that it will no longer use nickel in its kitchens and bathrooms.

However, the surplus of aluminium is expected to narrow to 301,000 tonnes this year from 609,000 tonnes in 2010 according to Bank of American Merrill Lynch. Lead is expected to have a shortfall of expected demand of 61,000 tonnes from a surplus of 35,000 tonnes. The glut of zinc is expected to drop to just 11,000 tonnes from 675,000 tonnes.

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