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Nickel surplus to hit 90,000T in 2013: INSG

Keywords: Tags  nickel surplus, nickel production, nickel consumption, INSG, Barclays Capital, Daniel Fitzgerald

NEW YORK — Global nickel production is projected to exceed consumption by 90,000 tonnes in 2013, according to the International Nickel Study Group.

The organization projects global production of 1.86 million tonnes in 2013, up 5.7 percent from 1.76 million tonnes in 2012. Consumption is forecast to reach 1.77 million tonnes in 2013, up 7.3 percent from 1.65 million tonnes in 2012.

"Nickel demand in early 2013 improved relative to the latter part of 2012. With new nickel projects recently coming on-stream, nickel production so far this year has increased and will likely continue to increase in coming months," Portugal-based INSG said.

"There are some indications that slower Chinese economic growth is affecting the domestic nickel market, with usage increasing more slowly than in recent years," the report said. "Indonesian nickel ore export restrictions implemented in 2012, in the form of an export ban, have not materially reduced supply to China so far in 2013."

Meanwhile, Barclays Capital Plc has adopted an "invigorated bearish perspective on nickel," with supply and pricing fundamentals poorer than anticipated so far in 2013, according to a research note.

Barclays recently upgraded its nickel surplus forecast to 108,000 tonnes from 88,000 tonnes, while downgrading its 2013 London Metal Exchange cash price forecast to $16,766 per tonne ($7.60 per pound) from $17,766 per tonne ($8.06 per pound).

"Until evidence of supply cutbacks gathers pace, prices will need to trade lower for longer than previously seen, and any move higher in prices will in turn reinforce what we expect to be a record refined market surplus this year," Barclays said.

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