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Nickel production cuts said needed

Keywords: Tags  nickel premiums, nickel demand, nickel production, LME nickel, London Metal Exchange, Daniel Fitzgerald

NEW YORK — Nickel traders are waiting for production cuts or consolidation to force a rise in premiums or official prices as the spot market remains stagnant.

Melting-grade nickel premiums were steady in a range of 15 to 25 cents per pound and plating grade held at 50 to 60 cents per pound for truckload business.

The London Metal Exchange three-month nickel contract closed the official session June 20 at $13,815 per tonne ($6.27 per pound), down 8.4 percent from $15,075 per tonne ($6.84 per pound) two weeks earlier.

The plunge in nickel prices to their lowest level since mid-2009 (, June 11) failed to entice consumers into the spot market, however.

"We’ve had a few inquiries recently, but nothing crazy, even with the market prices where they are," one trader said.

"It’s been down for long enough that people are expecting it to keep on going," a second trader said. "If the price keeps on declining, you’ll see some producers exiting the market or at least cutting back. I’m kinda surprised it hasn’t happened already. Something has got to give."

A third trader agreed that the market would need the withdrawal of nickel production to force the supply/demand equation back into balance and drive up premiums and prices. "A lot of producers are losing money on every pound at this level," he said. "You have the LME stocks at 185,000 (tonnes); next week it will be at 190,000 and then 200,000. It just keeps going up, and the fundamentals are not looking so good. There is no light at the end of the tunnel, and I think we’ll have overcapacity going into 2014."

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