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Nickel said likely to see more consolidation

Keywords: Tags  nickel, consolidation, David Wilson, Citigroup, Patricia Mohr, Scotiabank, Angus Staines, UBS Vale

TORONTO — The nickel market is likely to see more consolidation and price increases in the coming years, although all eyes are on Indonesia over its proposed ore export ban, according to speakers at an international nickel conference in Toronto.

Capacity closures and consolidation will continue to be a factor in 2013, David Wilson, director of metals research and strategy at Citigroup Inc.’s research group, said during a pricing panel at the conference sponsored by AMM sister publication Metal Bulletin. "I think we will see more capacity closures, so the market could tighten up this year. Nickel is one of the most consolidated markets already, but I think we will see more consolidation."

Wilson noted that with "considerable outages" at some nickel mines—including Vale SA’s Onca Puma in Brazil and Mechel OAO’s Southern Urals—the industry has already reached most analysts’ projected disruption rate for 2013.

UBS AG analyst Angus Staines said his firm is forecasting nickel prices will reach $9.80 per pound by 2015. "We expect prices to strengthen between now and 2015. The nickel surplus will peak this year and gradually approach balance in 2015," he said. "The key risk to that is an implementation of an export ban in Indonesia."

The Indonesian government is currently reviewing a proposed ban on all mineral exports from 2014 in a move intended to support its domestic refining industry.

Scotiabank commodity market specialist Patricia Mohr said that an Indonesia export ban "would do more than anything" to boost nickel prices. "I think prices for nickel will be at a low ebb for a few years, but then at the end of the decade will go higher," she said.

Mohr added that she believes the eurozone continues to be "the real risk on the macro front" for base metals pricing, although Wilson said he believes "a lot of the European issues have already been factored into prices."

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