The Hindu Business Line : Nickel touches year's low of Rs 675 a kg

NICKEL cathode prices in the domestic market touched the current year's low of Rs 675 per kg here on Tuesday mainly due to restricted demand from stainless steel units against limited but steady supply, trade sources said.

Domestic prices crossed Rs 1,000-mark and reached the current year's new high of Rs 1,001 per kg on January 5 in tandem with the London Metal Exchange (LME) trend. Nickel is mostly used to manufacture rustproof stainless steel.

"Domestic prices are moving in tandem with London market but because of narrow demand from domestic stainless steel units, prices fall was more sharper than London," a leading importer said.

Nickel cathode in Mumbai was down Rs 321 a kg or 32 per cent at Rs 675 per kg on Tuesday against Rs 1,001 per kg as on January 5. On the LME, nickel spot prices dropped by about $3,940 (Rs 1.7 lakh) per tonne or nearly 24 per cent to $12,750 per tonne on April 16 from $17,770 per tonne as on January 6. LME inventories have fallen to 14,550 tonnes as on April 1 from 24,072 tonnes on January 1.

"Nickel prices in domestic as well as overseas markets may make a U-turn soon on the hope of revival of fresh demand from stainless steel sector," an analyst said.

There are reports that Chinese steel producers are preparing to set up mills in the US, Brazil, and Australia to help it keep up with its booming steel demand.

The largest producers of nickel in 2003 were Norilsk of Russia, Inco of Canada, Falconbridge of Canada, and WMC of Australia. The largest reserve bases of nickel are Australia, Cuba, Canada, Indonesia and New Caledonia.

All mines are presently running at near capacity.

The next large mine to come onstream will be Inco's Voisey Bay Project in 2006. Societe Generale forecast nickel demand to rise by about 5.5 per cent in the West and 7 per cent worldwide in 2004.