Market Analysis

Finam presented its forecast of price of nickel. According to the study of the investment company, the average price in 2010 will be $ 17,000 per ton in 2011 to reach $ 18000 per ton. Analysts expect nickel prices will be under pressure from record stocks, weakness in the stainless steel and cheap substitutes.

"Since early 2009, the price of nickel rose by 50% (from $ 11 thousand per ton to $ 16,5 thousand), lags significantly behind most other base metals. The average price of nickel, adjusted for inflation, over the period 1949 -- 2008. amounts to about $ 12,500 /ton in the prices of 2009. The average price of the metal in 2009 was 17% higher than historical values, accounting for about 14600 $ /t, "- says the study" Finam ".

The main driver for the nickel market on the background of a weak real consumption has become an investment demand for the metal, said strategist Finam "Vladimir Sergievsky. He estimated that the additional support in 2009 provided the strike at Canadian plants Vale Inco, the second largest nickel producer in the world: "By our estimates, losses from Idle capacity in Canada is not less than 13 thousand tons of nickel per month. And the results of 2009 , the total supply of nickel from the Vale will be reduced to not less than 40 thousand tons, representing about 3% of world production.

In the study "Finam" indicates that pressure on the market have a record of nickel reserves of the metal. Thus, from the second quarter of 2007 against the backdrop of oversupply in the market began a steady growth of nickel inventories on the LME, said Mr. Sergievsky: "By the end of 2009, their volume went up to 10% of annual consumption, and is currently at maximum historical levels. Such an impressive volume of reserves, of course, puts pressure on quoted market prices of nickel.

Among the negative factors for the cost of nickel, analysts of investment company is also called the weakness in the stainless steel. "To date, approximately 60% of nickel produced is used in the manufacture of stainless steel, which makes the price of nickel sensitive to the conjuncture of the market. Since 2007, world production of stainless steel gradually decreases, and up to 2009, its volume can be more than 20 % yield record two years ago "- said in a research note.

limiting factor for nickel quotes Mr. Sergievsky also calls the current low prices of substitutes, such as ferrochrome: "For the nickel market is characterized by a sufficiently high level of competition from materials that are able to replace the nickel in stainless steel production. Since the period of high prices in 2007, active development trend has gradually reducing the share of production of stainless steel with high nickel content.

Despite the weakness of the key consumer of nickel, analysts predict that the price of this metal in the coming years will be supported by rising investment demand against the background of a gradual diversification by global investors dollar-denominated assets. "Redistribution of investment flows to commodity markets will, in particular, and nickel prices remain above historical values in the next few years", - said in a research note "Finam".

Department of Public Relations and Media Investment Holding Finam.
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