Nickel at its zenith

Exchange speculators raised its price to a record 50 thousand dollars per ton

For the first time in history, the price of nickel exceeded the psychological barrier - $50 thousand per ton. Yesterday on the London Metal Exchange it was sold for spot delivery at $52.735 thousand per ton, and contracts for delivery in three months at $49.5 thousand. Nickel has been steadily rising in price since the middle of last year, and since the beginning of this year it increased in price by almost 50%. Traders explain this jump primarily by a decrease in reserves of this metal on the LME to 4.9 thousand tons - according to analysts, this is approximately two days of global consumption. However, analysts say the main driver of the process is the speculative factor; they are confident: despite the shortage of nickel on the market and the readiness of the South Asian market to absorb it in unlimited quantities, this price is inadequate and seriously inflated.

Apart from a minor correction in 2006, nickel, like other non-ferrous metals, has been steadily rising in price since 2002. But it was especially noticeable in 2004. “Speculators then thoroughly entered this (commodity and raw materials - Ed. ) market,” says Brokercreditservice analyst Vyacheslav Zhabin, “but they never sat there as tightly as they do now.” The head of the analytical department of the Prospect Investment Group, Dmitry Parfenov, says that now there is a large amount of money in the market, which is moving around different sectors - the oil sector, the precious metals sector, and now it’s the turn of the commodity sector. In his opinion, hedge funds are now the main players in commodity markets. But he cannot predict how long nickel and other non-ferrous metals will rise in price. Mr. Zhabin also points out the dependence of the price of nickel on the limited volume of its supply and on production news (cessation of production due to a strike, delay in the implementation of announced projects, etc.).

Norilsk Nickel, the largest nickel producer in the world, refused to comment on the news of a new record price for this metal. However, two weeks ago, meeting with journalists, the then head of the company, Mikhail Prokhorov, expressed the belief that prices for non-ferrous metals are only at the beginning of the cycle, and in the next few years we should expect their noticeable growth. In his opinion, the market need for raw materials, especially non-ferrous metals, is now so great that the demand, for objective production reasons, cannot be satisfied by the existing supply. In addition, the world market is flooded with funds raised as a result of last year's rise in energy prices, so expecting a quick correction in these conditions, he believes, is naive.

Analysts are convinced that the rise in nickel prices in the future may play a negative role in the development of the industry. “In the short term, an increase in the price of nickel for nickel mining companies is certainly positive,” says Mr. Parfenov. “And so far they feel great.” But in the future, he said, a number of consumers will begin to abandon nickel-containing materials in favor of cheaper analogues, such as titanium or aluminum alloys, because “there is always an alternative.” However, Mr. Zhabin is confident that demand, especially in Southeast Asia (mainly in China), is almost unlimited, and consumption will still grow. Moreover, all projects to expand nickel production, the launch of which was scheduled for next year, are postponed due to their strong rise in cost.

Anna LANDER