News item
20 Apr 10
Commodity diplomacy instead of commodity protectionism
It is not quite four weeks since the last publication. On the 23rd March 2010 the quote for 3 months nickel was still at USD 22,390.00/mt. In the meantime it has risen to levels over USD 27,500.00/mt, which is a rise of 22.82%. At the moment the metal is trading around USD 26,000.00/mt. It is presumed that this correction has been caused by the reaction of the financial markets to the SEC (the American Securities Exchange Commission) filing a civil charge of fraud against the investment bank Goldman Sachs.
After this news broke, other financial and stock markets also turned weaker. On top of this, the volcanic eruption in Iceland, creating huge problems for the air travel industry, has not helped matters. Nevertheless, this consolidation, perhaps brought about by these exogenous influences, was more than overdue for the nickel market. Rates had been moving in the overbought area for a while so a technical reaction had been expected anyway in the near future. This has now happened. It is quite necessary to have corrections now and again to ensure a healthy market development. LME stocks are continuing to fall, which speaks for a growing physical nickel demand, so it cannot be expected that this correction will turn into a one way move. On the contrary, firmer nickel prices can be reckoned with (for the time being). On the 23rd March, LME warehouses stored 157,368 mt; on the 20th April there was only 149,946 mt, down 7,422 mt, or in other words, a reduction of 4.72%. Prices were then seen clearly over the USD 27,000.00/mt level.
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