Stainless Steel Prices & Nickel News, Prices, LME Nickel Pricing, Stainless Steel News – Molybdenum – World Metal Prices and Market Conditions

  Quote from China article titled “Nickel prices vulnerable to rising long-term imbalance between supply and demand is difficult” – “In summary, although the effects of global macroeconomic control in different areas gradually became apparent, it also poses greater pressure on commodity markets. However, due to the strong fundamentals of nickel shown to the independent movements, the growth of the supply expected in the coming year is less likely. There is no significant decline in demand. A dual role of the tight supply situation will be difficult to improve significantly, therefore, in times of high prices, nickel prices rise difficult or easy.” Also, from another article we mentioned Thursday “Sumitomo Metal mining official said, “China’s demand for nickel has grown by 20% compared with the past few years, and we expect this data will be maintained in 2007.”
  World’s largest nickel mine returning to state control? – “The Jeweled Nickel” – “More likely than not, the negotiations will ultimately result in establishing the state control over the metal giant, the more so that the Kremlin is said to be studying possible methods of returning Norilsk Nickel back into the state ownership.” – more here
  Flooding halts effort to rescue 29 Chinese miners – “Rising water levels have forced the suspension of efforts to rescue 29 Chinese miners trapped for three days in a flooded iron ore pit, the official Xinhua news agency reported on Saturday.” – more here
  Molybdenum Outlook 2007: Metal Lacks the Price Hysteria of Uranium – “This past Tuesday, molybdenum traded at $24/pound when a Chilean copper commission spokesperson forecast the metal would drop to an average $20/pound this year. But on Thursday, Platts Metal Daily reported molybdenum oxide trading higher: $24.80 to $26/pound.” – article here
  Bank expects SA mine output to rise in 2007 – “International specialist banking group Investec expects that South African mining production will improve in 2007 as new projects come on stream.” – more here
  Nickel Institute – Nickel Consortia to be Launched – “Producers, users and importers of nickel are launching the Nickel Consortia, in order to efficiently meet all its requirements under Europe’s new chemicals policy Registration, Evaluation and Authorization of Chemicals – REACH.” – More here  and more on EU “REACH” effective June 1, with video introduction – here
  Commentary – (disclaimer – this is a personal opinion only, and based on no insider information) The history of negotiations between the former Falconbridge and Mine Mill & Smelter Workers – Local 598 of the Canadian Auto Workers Union was, to say the least, contentious. The last three times these two met to negotiate a three year contract, the talks ended in strikes ranging from weeks to months. Xstrata’s buy-out of Falconbridge, and the introduction of a new management team, offers both parties the opportunity to put any old animosities aside, and gives both, a fresh pool to swim in. For Xstrata, who successfully negotiated the end to a four day strike at its Altonorte copper mine in Chile in December, it allows an opportunity to establish an environment of diplomacy that will set the tone for years to come. For Local 598, it offers a chance to put history with a company that allegedly tried to break their union once in the rear view mirror, and establish an environment of compromise that benefits both their membership, and the long range profitability of their employer. As I have grown older, I have come to appreciate what unions have done, for all of us. Simple employment ‘facts’ that we all take for granted today, were gained at the expense of hard fought sacrifices made by our union forefathers. One only has to travel to some third world countries today to see conditions similar to those our ancestors worked in, until unions were formed and demanded employers recognize employees were more than a disposable commodity. For the sacrifices they have made, and the hard fought “rights” they have gained for all union and non-union members alike, they are owed a debt of gratitude by all of us. That said, there seems to be a stigma attached to unions that, at least in my area, their leaders never saw the forest because of the tree they planted themselves behind. I say saw, because in the last 30 years, union membership in my part of the state has been decimated by plant shutdown’s. In the present negotiations, and from the Local 598’s own web site, the two sticking points appear to be vacations and postings. (see press release dated yesterday). Since I am thousands of miles away and have no little bird telling me the inside scoop here, I can only guess this is about job postings and annual vacation scheduling, which, on the same site, appears to have been complaints Xstrata has inherited.(see here)

So why do I think Xstrata and Local 598 will avoid a strike? First, and most importantly, everyone involved in the nickel mining industry is making ‘extra’ money right now. That includes the stock-holders, the managers, and the guys down in the mines. Production at most mines is going ‘flat out’, with every pound of nickel mined selling for seven times what it did just a few years ago. Allowing a strike to stop production at this point carries multiple risks, especially when nearly half of your corporate production could be affected. While prices would likely go even higher with a strike, if you are shipping less nickel, you aren’t reaping the benefits of the current windfall, and you could watch your competitors reap the new windfall your strike would bring about. (that would be kind of like CSTNC striking against SLN when their complaints were against a competitor, CVRD-Inco, frustrating to say the least) And secondly, declaring force majeure at this point of the bull ride, carries extra risks. Many of those who follow the market closely, are forecasting 2008 could look a lot different than 2007, when it comes to available supply of nickel. We are witnessing the part of the cycle when, as prices rise, new money pours into exploration and new site development, and inevitably, this rush will bring on a period when supply exceeds demand and prices will falter. With new suppliers coming on the scene in the near future, hungry for customers, now is not the best time to annoy those customers you have, by putting them in the position to scramble for nickel, when it isn’t in surplus.(For those who would use Inco and last years strike at Voisey’s Bay to dispute my theory, I would saw the situation was much different, and that Inco, with their ‘new’ source of nickel, was not in the same predicament Xstrata is. And what about the strike vote? Of course, they gave their leadership a strike mandate. The strike mandate is the union telling Xstrata we can play hardball if we need to. If you didn’t, it would be like a used car salesman telling you “this is our absolute and final best offer…..but it’s negotiable” ) Thirdly, with mines worldwide suffering from a lack of trained employees, any union representing experienced miners and smelter professionals, especially one in Canada with the nearby Oil Sands projects offering great wages, should carefully consider whether its membership’s loyalty to its union, is as strong as their commitment to putting food on the table for their family. Thus, in this case, especially in this case, it is in both sides mutual interest to find common ground. Therefore, it is my humble opinion, that negotiations will go down to the wire (no use settling early when you know the price of nickel will probably drop as soon as you settle), but that before the current contract expires, the two sides will reach an agreement. (Then again, I predicted nickel would peak at $6/lb, no not $16, six – so you get what you pay for) (For those who wish to take issue with this, please remember opinions are like armpits. We all have a couple, and if they smelled half as good to those around us, as we think they should, there would be no need for the billion dollar deodorant industry! And you can take that from a guy who lost water for a week!!)
  The cargo ship we mentioned earlier this week, that had been abandoned and was reportedly sinking, will be run aground to keep it from sinking. BUT the company has told Reuters that there is only 160 tons of nickel on board, not the 1000 tons as they reported earlier. More here
  We post links to, what we think, are the best nickel related daily reports in our left column. But there are reports out there that we do not, or can not, link to daily. Some of you might find them helpful so we will periodically give you some on the weekend updates. This blog is free and therefore, only links to sites and articles that are free. Please bookmark those you like.
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  Daily Osaka nickel prices link here   (and)   the Central Japan Commodity Exchange here
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  This one is for those who want to follow other worldwide economic factors – this page gives you multiple links to daily reports – FX Street Market Analysis here