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Stop this madness!
News - 18 Sep 08
In the current global financial climate, and dramatic economic events making headlines one after another, including the collapse of the US investment bank Lehman Brothers and the more or less take over of the insurance company AIG by the state, it is difficult to make even a small assessment on the state of the commodity markets amongst all this turbulence. For this reason, only a few general comments will be made: At the moment gold is enjoying a renaissance, resulting from the US money market funds having to report losses, under the shadow of the Lehman insolvency. But in today’s world, it is no longer just the more speculatively orientated investors who buy and sell gold, but also the insecure investor. Going back to March this year, gold has climbed almost in line with the oil price, reaching, on a weak US dollar, to around 1,000.00 USD an ounce. Gold is seen as a safe haven, giving the feeling of being a good way to secure one’s assets. The interest rate is not seen as quite so important. Amongst the base metals, such as nickel, copper and aluminium, the situation looks quite different. All hopes of a short term recovery in these markets seem to have been put to bed by even the most optimistic of thinkers, due to the scenario of present turbulent global economic troubles caused by the banking crisis. Only an even further radical deepening of this crisis could bring about an almost anachronistic rise in prices. If insecure investors recognise that base metals are also fungible assets, almost as good as gold, then they too could be used as wealth protection. Only the gold standard for the world currencies, long ago discarded, sets gold apart. But it would not be too realistic to expect this sort of scenario.
Holiday in Norilsk
News - 22 Aug 08
The introduction of one candidate nominated to be new CEO of Norilsk Nickel has caused a stir in the nickel market. The proposal is for Mr. Vladimir Strzhalkovsky, the former head of the state run Russian tourist office. Probably having little experience in the shark pit “metals and mining”, one has to ask just what has led to his nomination. Apart from general business acumen and a good relationship with the Russian government, it is suspected that Potanin, chairman of the board of directors of Norilsk, could be interested in brightening up the city of Norilsk to become a tourist centre. Apart from the adverse climate conditions and sparse fauna, Norilsk is also on the list of the Blacksmith Institute as being one of the ten most polluted towns in 2007. Mr. Strzhalkovsky would have quite a lot to do. In the meantime, this candidate and ex-KGB officer has unsurprisingly been voted as CEO of Norilsk Nickel. It can be assumed that with strong government ties, the Kremlin is trying to gain some control in the power struggle of this strategic asset. Parallels can also be made in other areas of Russia and how it is represented externally. It differs quite significantly from the positive picture shown by China, as discussed in the last report. Are the differing approaches possibly a reason for the fact that China is prospering better? The question has to be asked – what can still be expected of Russia? The safeguard of “super power” status, by controlling access to raw materials (e.g. gas and nickel), and this can be said with certainty of China too, is certainly part of the strategy in Russia.
Halftime
News - 24 Jul 08
Both the calendar and the business year are now half-way through, giving opportunity to look back at the data to assess the present, and to dare a look into the future. To do this the poll taken of leading analysts in banks, metal brokers, and research institutes, by the news agency Reuters, can help. A total of 45 addresses were asked, of whom all, with the exception of 3, gave an opinion on the nickel market. For the first time in the questionnaire, the expectations of nickel supply and demand were enquired about. The number of replies here, for whatever reasons, was quite different. It seems only 20 participants had replied with any definite thoughts on this market situation. While this makes it creditable enough, quantity-wise, to be published by Reuters, it does, however, cast doubt on the actual worthiness of the statements, being based solely on the primary nickel market, a point often discussed here. Yet, without including this figure, a serious forecast on further market development cannot be made. But we just mention this as an aside.
Lord Stern heaps praise on metal recycling at CO2 discussions
News - 18 Jun 08
Since our last report, nickel prices have briefly touched levels as low as USD 22,000.00/mt on the London Metal Exchange, fuelled by the general uncertainties in all markets. Prospects on the Asian markets are not particularly appealing, and added to this is the fact that there is a cautious sentiment at the moment towards base metals. With a background of sharply rising oil and energy prices, the changed inflation outlook and speculation of interest rate increases by the central banks have not really been a help in the macro-economic field. Quite the opposite! As LME stock levels are decreasing further, and, at the same time, events are taking place in Australia, described more in detail below, the market price for nickel has recovered to just below USD 25,000.00/mt. At the moment of writing, prices are trading within the range of USD 23,500.00/mt and USD 24,500.00/mt, so that a more sideward trend can be expected as we head for the lull in news during the summer months. How and why this lull (before the storm) can sometimes be deceptive, will be explained later.
In the USA coinage is becoming too expensive
News - 15 May 08
For the last few days, nickel stocks on the London Metal Exchange (LME) are decreasing again. The high so far of 52,308 mt was reached on 22nd April 2008. Since then the stocks have fallen below 49,500 mt. This has not caused a major change in the supply of the market so nickel prices have not been influenced too much by this. The correlation seen so far between the metal prices and the USD/EUR exchange rate development does no longer exist, and the so called metal knot of copper, aluminium and nickel seems to have become untangled. As far as the raw material demand from the stainless steel sector is concerned, the demand in Europe is (still) good, but the markets in Asia and the USA are still below their potential and expectations. Seen from the technical aspect, the tendency is more towards a consolidation, if not even an easing off of prices, yet, as we have seen a rise in aluminium prices following the earthquake in China, fundamental events can still influence the market. On the other hand, it must be positive that a research company, which for many years has misinterpreted the market development, is now quite certain that a further price correction is due. In the present negative correlation between forecast and actual prices, and with more unqualified opinions, it should not be ruled out then that nickel prices could firm up quite a lot.
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