Nickel finally caught a break as it capped a huge two-session price gain after 11 months due to pressure on supply. The supply constraint was brought by a strike at one of the world’s largest nickel mines owned by Anglo-Australian firm BHP Billiton Ltd., in Colombia.
According to a report by Bloomberg, the mining site in Colombia stated that it is currently at “less than full capacity,” with the company sending force majeure notices to its customers. As a result, nickel and tin became two of the six main metals on the London Metal Exchange. This puts the spotlight on speculations as to whether China will decide to take action to support its metal industry after huge profits sunk in March.
Michael Turek, head of base metals at BGC Partners Inc., wrote in a statement that the force majeure, a clause included in contracts to remove a company’s liability for natural catastrophes, caused the rallies and strikes. “The complex has been further fueled by the force majeure in nickel. This stoppage has specifically fueled a rally against a background of current supply being constrained,” wrote Turek.
In the past three months, nickel for delivery gained 2.7 per cent at $13,550 per metric ton in the London Metals Exchange. The prices increased 6.7 per cent in two sessions, the metal’s highest. Colombia’s BHP Billiton assured that a resolution is being pursued to fix the labor issues at its Cerro Matoso Mine.
This price hike is indeed a signal that nickel continues to be a hot commodity. Jason Stevenson, a commodities expert, wrote that investors are betting on nickel for resource gains this year. Stevenson stressed the fact that China, the largest importer of many metals, is still “hungry” for high-grade nickel. China needs nickel for both its consumer and investment-driven economies.
Stevenson also revealed that Chinese stockpiles of nickel decreased to five million tons, which represent 30 percent of the metal’s supply since November 2014. Compared to this time last year, nickel in China was down to 50 percent.
It is important to note that since Indonesia banned all its exports on raw nickel, there are less high-grade nickel ores coming into the market. Philippine exporters are currently filling the Indonesian nickel void, since the country is currently providing China with nickel pig iron, but only for a certain amount of time. Also, the quality of Philippine nickel is significantly lower than Indonesia’s, therefore increasing the cost base for Chinese NPI.
The future of nickel is indeed in high spirits, especially with developing projects that aim to produce millions of tons. In the Amur Oblast region in Far Eastern Russia, Amur Minerals Corporation (OTC:AMMCF) is currently securing its license from Russian Prime Minister Dmitry Medvedev. Once the company gets its exploration license, Amur Minerals will start unearthing 67 million tons of high-grade nickel. When this happens, the gap created by the Indonesian nickel ban will have a solution.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
What 2019 possibly holds for the top tech stocks
2018 was a wild ride for tech stocks. Here’s how they are likely to perform according to predictions from experts.
Here’s how you can improve your hotel service
It's one thing to review comments from your guests, but it's another thing to thoughtfully listen to their suggestions to...
5 major things to look for when buying your first home
Save yourself from the headache of buying a house with these helpful tips such as looking for hidden issues, and...
4 ways mobile technology can boost your business
Mobile technology has changed the way people do business, as well as the consumer habits. Here's how it helps you...
How farmers are handling the rising costs of equipment
American farmers are hit hard by the demands of rising competition, land costs and advancements in equipment. Balancing the need...
Featured3 days ago
CEOs Fishkin and Ramsay: From financial burdens to million-dollar companies
Destinations3 days ago
Millennials with money escape to Mexico’s Bohemian luxury
Business4 days ago
Disney continues quest to buy Fox, Brazilian regulators raise concerns
Sponsored3 days ago
The Alkaline Water Co. begins trading on NASDAQ today
Sponsored2 days ago
Cannabis retailer Choom secures leadership position with Ontario expansion
Business4 days ago
IoT and LaaS mean stronger growth for LED market
Crowdfunding4 days ago
Why female and minority founders should look to crowdfunding
Featured5 days ago
Self-Directed IRA LLC: How to know it’s right for you