Nickel price rises following demand for stainless steel

Last Thursday, the price of nickel on the London Metal Exchange (LME) began to rise again. The reason for this was information about a possible increase in demand for steel, due to which the demand for nickel may also start to grow.

In particular, in a message from the MEPS company, published on February 6, it was said that during 2014 the global production of stainless steel should reach 39 million metric tons. Moreover, almost half of this volume should be produced in the PRC.

This forecast was expressed today by Richard Fu, who is responsible for Asian commodities trading at Newedge Group SA. In particular, he stated:

"The forecast by MEPS is not surprising at all, since China, as well as other developing countries, are currently demonstrating high rates of increase in demand for stainless steel, which creates the preconditions for the future growth of its production."

It should be noted that the increase in demand for nickel is not accidentally associated with an increase in steel production. The fact is that 65 percent of all nickel mined in the world goes to the manufacture of stainless steel. At the same time, an increase in the production of the latter is constantly making itself felt.

As a result, over the past three months, the value of one ton of nickel ore on the London Metal Exchange was able to increase by 1.1 percent, amounting to USD 13,910.

Also, the prices for this product increased due to the ban on the export of unprocessed nickel ore from Indonesia, approved by the government of this country in January 2014. It should be reminded that despite the fact that Chinese metallurgists are suffering significant losses from the ban on the export of Indonesian nickel ore, the Indonesian government does not intend to cancel it.