Nickel gains ground on stainless steel demand

Nickel prices in the domestic market scaled up 12 per cent in the last one month to Rs 1,370 per kg from Rs 1,220 on July 7.

This surge is in tandem with the rise in prices on the London Metal Exchange (LME), which saw an increase of 9 per cent during the period under consideration to $27,800 a tonne, a rise of $2,295 against $25,505 a tonne on July 7.

Analysts say that LME prices went to record highs amid strong demand from stainless steel market and tight supplies owing to strike at Voisey's Bay (an arm of Inco Ltd), which has led to the cut in nickel output by 6,000 tonne a day resulting in bullish sentiments.

Surprisingly, the mine had started production of nickel concentrate in November 2005 targeting a full-year production of around 62,000 tonne.

The stocks of nickel on the LME declined by 44 per cent (4,146 tonne) to 5,256 tonne on August 4 compared to 9,402 tonne on July 4.

According to industry sources, further decline in the stocks are anticipated on the back of cancelled tonnage, which are due to leave LME warehouses.

The majority of this cancelled tonnage is held in Germany (966 tonne), The Netherlands (858 tonne) and Sweden (1,110 tonne).