August 2007 Stainless Steel News Archived

  Today’s official LME nickel closing prices – cash – $12.60/lb – 3 months buyer – $12.70/lb (101% higher than 1/1/06). The Baltic Dry Index slipped again today, falling 32 points to 7,211. LME inventories were up, but just barely. The warehouse at Rotterdam, Netherlands, received another 138 tonnes of nickel, while they shipped 72 tonnes, as did Busan, South Korea, who shipped 54 tonnes. There is an old saying “Figures lie and liars figure”. Today is one of those days that number crunchers love. We have listed below the import figures for China for July and year to date, released by China Customs this morning. The bullish news is that the country’s imports of refined nickel continued to grow. The bearish news, and its bearish, is that imports of nickel ore continue to soar at a staggering rate. Pig nickel is definitely getting a larger piece of the pie. The bulls were happy with what they saw in BHP results today, while bears took note of the fact the profits were high primarily because of inflated nickel prices during the 2nd quarter. And the coup de grace today, was the report by the World Bureau of Metal Statistics that world nickel demand/supply remained in the deficit for the first 6 months of 2007, by 2,600 tonnes. We aren’t your Harvard educated type’s, so we don’t claim to know their secret formula to arrive at these numbers. But we would like to note than on January 2nd, the first business day of the year, nickel inventories stored in LME warehouses amounted to 6,594 tonnes. On June 30th, they had grown to 10,458 tonnes. Deficit? You’ll have to make it work, because we can’t.

We said we would be surprised if nickel ended as high as it indicated this morning… and we are. We expected prices to hit bottom, but not to bounce so high, so fast. Either traders are betting inventories have maxed out and the market is getting interesting again, or we are witnessing a spurt of enthusiasm that will fizzle at the first hint of another large gain in inventories. For the third day in a row, the clues left by the inventory figures, hint at a potential turn around in the market. Another bullish day for nickel, which ended at $12.77/lb ($28,150/tonne), up over $2,000/tonne in as many days. (Dow Jones – more) (Reuters – more)

  (disclaimer – subject to correction – our Chinese translation stinks – the totals should be right, the growth percentiles may be attached to wrong figure) China refined nickel imports for July rose 20.2% in July (1,167 tonnes) and 36.6% for January thru July 2007 (62,527 tonnes) compared to the same period last year. Primary sources shown are Canada, Australia, Russia, and Norway. Imports of nickel ore rose 827.1% (2,277,956 tonnes) over last July, and for the year, have grown by 783.5% (9,299,963 tonnes). Primary sources are shown as the Philippines, Indonesia, and New Caledonia.   

  International Stainless Steel Forum releases 2006 figures – Foreign Trade Flow Stainless Steel Products in 2006 Exports here Foreign Trade Flow Stainless Steel Scrap in 2006 here

  Nickel Institute new articles

• Japanese Club Promotes Stainless Steel Water Pipes – “There are many advantages of using stainless steel water pipes in countries where water resources are scarce and in countries such as Japan where water leakage is a problem.” – more here
• Big Plans Take Off on the Arabian Gulf – “When it is completed in 2009, the new international airport in Doha, Qatar will be the first airport designed specifically to accommodate the Airbus A380 super jumbo.” – more here
• Processing Perfect Poultry – “Stainless steels enable food processors to maintain hygienic conditions in long-lived equipment” – more here

  Copyright/courtesy China Business Daily News – “Shanxi Taigang Stainless Steel Co., Ltd., a listed subsidiary of Taiyuan Iron & Steel Group, reports a 299.10% year-on-year growth in the net profits in the first half of 2007, reaching CNY 2.74 billion, or CNY 0.7924 per share. The interim report says that its operational revenue in H1 hit CNY 40.1 billion, soaring 173.75% from a year earlier, and the overall gross profit margin was 13.64%.”

  Copyright/courtesy Dow Jones – “LME nickel is seen averaging $28,300/ton  ($12.84/lb) in 3Q and and $30,000/ton ($13.61/lb) in 4Q, says Standard Chartered. Notes the recent selloff has been overdone and that nickel demand will pick up as destocking by the stainless steel industry comes to an end. There is already strong evidence that nickel pig iron producers have made significant cutbacks, which will help tighten supplies, Standard Chartered adds. Sees nickel averaging $27,000/ton ($12.25/lb) in ’08.

  Copyright/courtesy AFX Financial – “Nickel consumption increased by 11% to 744,000 tonnes in the first six months of 2007, compared with the same period last year, leaving the market 2,600 tonnes in deficit, said the World Bureau of Metals Statistics (WBMS). Mine production for the same period increased by 8% to 760,200 tonnes, while refined production was 11.8% higher, stemming mainly from China, Finland and Canada.”

  WMC makes BHP different – “BHP Billiton’s profit growth slowed in the June half-year. But it was stopped from ‘going down to Rio’ by the fabulous profits on nickel.” – more here

  BHP Says Credit Squeeze Won’t Reduce Commodity Demand (Update4) – “BHP Billiton Ltd., the world’s biggest mining company, said a global credit squeeze is unlikely to derail the five-year rally in commodity prices being driven by the emerging economies of China and India.” – article here

  Hagedorn declares ‘total war’ on mining – “Shocked by the overwhelming number of mining applications covering almost every square inch of this 254,000-hectare newly-created city, Mayor Edward S. Hagedorn declared today a total ban on large-scale mining in this city.” – more here

  Indications at 7:50 am CST show 3 month nickel selling up by $.40/lb . We’ll be surprised if this ends this high. Today’s news is a mixed bag of bearish and bullish news, and traders are forcing price up too quickly.  (Bloomberg – more) (Reuters – more)

  Global Nickel Mkt In 2,600 Ton Deficit In Jan-Jun 07 – WBMS – “The global nickel market recorded a deficit of 2,600 metric tons in the first six months of 2007, with reported stocks 5,700 tons lower, the World Bureau of Metal Statistics said Wednesday.” – more here part 2

  Preliminary – Nickel imports to China rose 20% YOY in July – more later

  Copyright/courtesy Dow Jones Newswire – “Chinese customs data is bearish for LME nickel, says JP Morgan’s Michael Jansen. He notes imports of nickel ore are a clear record at over 2 million metric tons, “implying that nickel in the pig iron sector remained broadly healthy in July and that talk of production cuts from this alternative source of nickel for stainless steel producers may remain a story for August/September.” “Triland Metals notes nickel’s rally surprised many in market, since other metals mostly weakened in Tuesday’s session; technically, took out 10-day moving average, needs to break resistance at $27,500 to maintain upside momentum.”

  BHP News

• BHP Billiton will up 2008 nickel, copper output – “BHP BILLITON forecasts that its production of nickel, copper, iron ore and oil will show “significant volume growth” in 2008 after a year in which the leading commodity company posted record profits and production.” – more here
• BHP Billiton says outlook positive despite US debt crisis – “BHP Billiton is positive about the outlook for the diversified resources company despite the current sub-prime crisis in the United States as the industrialisation and urbanisation in India and China will continue to grow demand for its products.” – more here
• BHP profits as commodity demand soars – “BHP, the world’s biggest miner, has reported a 19% jump in second-half earnings on surging sales of copper, iron ore and coal, and flagged future growth to strong Asian demand.” – more here

  Is the fat lady still singing? – “Mining stocks have taken a severe beating during the recent equity markets sell off, falling, on average, by nearly one third from record highs, most of which were posted in the past few months.” – more here

  EU Steel Prices Holding Up At Record Levels Despite Increased Imports -“Last year represented the onset of greater global competition as China became a substantial net exporter of steel.” – more here

  PNG Study: Ramu Nickel Mine ‘High Risk” – “An environmental impact study on Ramu nickel mine has described the project as a “high-risk operation with severe impacts on the environment and community.” – more here

  Today’s beginning nickel inventory – plus 12 tons = 20,466 tonnes (3.40% – 696 tonnes cancelled warrants/ 19,770 net stock level) Shanghai Jinchuan nickel closed at 245000-247000 RMB/t, plus 4,500.