SINGAPORE/SYDNEY Aug 2 (Reuters) – Nickel miners are clinging to plans to maintain production, despite a growing supply glut and prices around four-year lows, raising the risk of more writedowns and losses being unveiled in the current financial reporting season.
France’s Eramet this week reported a first-half operating loss and warned the second half would be worse due to weak nickel prices, while other top producers such as Vale SA , Glencore Xstrata and BHP Billiton report in the next few weeks.
Between a quarter to a half of the nickel sector could be running at a loss, according to industry estimates, hit by weak demand from China, the world’s top producer and consumer of stainless steel. Nickel is a key component of stainless steel.
Nonetheless, few miners have yet made deep cuts in output and the trend is set to put more pressure on depressed prices.
“It’s a staring contest, no one wants to be the first to take the pain,” said Robin Bhar, an analyst at Societe Generale in London.
Three month nickel on the London Metal Exchange hit $13,205 a tonne on July 9, the lowest since May 2009 and down from nearly $19,000 in February. Nickel is the worst performer on the exchange so far this year, down nearly 20 percent. Continue Reading →