COLUMN-Nickel facing a long and rocky road to price recovery – by Andy Home (Reuters U.K. – June 5, 2017)

LONDON, June 5 Nickel touched a near one-year low of $8,700 per tonne on the London Metal Exchange (LME) last week.

It has recovered a little to $8,900 this morning but that still makes it by some margin the worst performer among the major LME-traded industrial metals with a year-to-date decline of over 10 percent. And, if you believe Goldman Sachs, the stainless steel ingredient is going to stay at these bombed-out levels for a good while.

The Wall Street heavyweight has just downgraded its three-month, six-month and 12-month price forecasts to $9,000-per tonne from $12,500, $11,000 and $11,000 respectively.

“We now expect that nickel prices will remain trading at very low levels through 2017 and much of 2018 until a substantial supply response both in China and outside of China eradicates our forecast surplus of 37,000 tonnes in 2017 and circa 100,000 tonnes in 2018,” according to Goldman (“Nickel: Low prices required”, May 29, 2017).

This marks the collapse of nickel’s previous bull narrative of mass mine closures in the Philippines. As that scenario rapidly recedes, nickel is once again facing a long war of producer attrition to rebalance supply with demand.

As recently as March, LME three-month nickel was on a bull roll, trading above the $11,000 level. The market’s exuberance was down to one woman, Regina Lopez, eco-warrior turned environmental minister in the Philippines.

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