Analysts split over 2013 nickel forecast

Dec 31, 2012 | 07:00 PM | Samuel Frizell

Tags  nickel, nickel market, 2013 outlook, China, Japan, David Wilson, London Metal Exchange, LME Citigroup

Is the glass half empty or half full? Nickel prices in 2013 will depend largely on supply issues, but with some analysts predicting another year of saturated nickel markets and others forecasting downturns in supply, the outlook is uncertain.

“I’m fairly optimistic ... because I do see there are some very big supply issues at the moment,” said David Wilson, director of metals research and strategy at New York-based Citigroup Inc.’s investment research and analysis division. “You can run through a whole list of plants that are having problems.”

With incident-prone mine startups casting long shadows over nickel supply, other analysts also say 2013 might be the year for prices to finally shine after a weak 2012, when they topped out at $21,725 per tonne in January and slipped to below $16,000 in AugustÑboth well below the 2011 high of $28,905.

A slew of nickel mines that use high-pressure acid-leaching technology will be out of the production circuit for at least part of 2013. Brazilian miner Vale SA, the world’s second-biggest nickel producer, has suffered furnace breakdowns at its 56,000-tonne-per-year Ona Puma Mine in Brazil and won’t restart the mine until at least mid-2013, even as it considers divesting its 60,000-tonne-per-year New Caledonia nickel project following a sulfuric acid incident in May. The kiln at London-based Anglo American Plc’s Barro Alto Mine in Brazil also is down, and the timing of a restart is uncertain.....