The Hindu Business Line : Nickel cathode moves up on demand

DOMESTIC nickel cathode prices have moved up again in the last one month on continued domestic demand from the stainless steel industry against restricted supply and firm global trend.

Prices fell 6 per cent during August and early-September due to restricted buying and increase in the London Metal ExchangeLME) inventories.

Nickel cathode prices increased by about 16 per cent or Rs 115 a kg to Rs 835 on Friday compared to Rs 720 on September 8.

On the other hand, nickel prices rose sharply by nearly 32 per cent during the same period owing to increasing demand from China and other Asian countries against a backdrop of limited supply.

At LME, nickel prices were up 32 per cent or $4,025 a tonne at $16,400 on Thursday from $12,375 on continued buying support despite increased LME inventories level.

LME inventories went up to 16,200 tonnes on October 7 from 13,236 tonnes on September 8 - up by 22.50 per cent.

"Domestic demand for nickel from the stainless steel industry is good. Overall demand for stainless steel in the architectural building sector (construction of big malls) and automotive sector is very good. Stainless steel use in the automotive sector, especially in car and railways coaches, has been increasing rapidly. On the supply side, no new capacities are expected to be added in two-three years," an official of a big stainless steel manufacturer said.

The annual growth rate of the stainless steel sector is expected to be around 8 per cent to 10 per cent this year. Demand from these two sectors is expected to grow over 10 per cent this year.

"Global demand for nickel is picking up. Demand from the US and EU countries have been increasing.

As a result, they are in the processing of relaxing their anti-dumping and anti-safeguard norms to augment new supply," he said.

Global nickel consumption is forecast to increase by around 4 per cent in 2004, as there will be a rise in demand in stainless steel in key nickel producing countries such as Japan, Korea, China and Taipei.

The world's primary refined nickel production will increase to 1.32 million tonnes in 2005 from an estimated 1.25 million this year.

Consumption is forecast to increase to 1.32 million tonnes next year from an expected 1.26 million in 2004, according to the International Nickel Study Group.

Macquarie Bank forecasts a 21,000-tonne deficit for this year, which will shrink to 10,000 tonnes in 2005.