News item
23 Jul 10
New tasks for Paul the octopus
In the last few weeks the nickel market has been moving along aimlessly without showing any great signs of life. It would have therefore been quite nice if the “octopus oracle”, Paul from Oberhausen, who played such an unfailing part during the football World Cup in South Africa, could also make accurate predictions about the nickel market. Looking at the fundamentals, it can only really be reported that the marked decline of commodity demand in the stainless steel works can most probably be attributed to the usual seasonal reductions and not necessarily to a double dip scenario.
There should actually be a revival in September/October, after the end of the summer period. What is speaking for this is that, although the strike at Vale Inco, in Sudbury, Canada, is now over after just short of one year, prices did not react much on the downside. This would really have been the tendency to be expected. Furthermore, the continuing decline of LME warehouse stocks carries on. From the maximum levels to the present (23rd July 2010) stocks have been reduced to 116,814 mt, which is to say by around 30%. On top of this, the small reduction in the South African Producer Price reference for ferrochrome, taking it from USD 1.36 per lb in the 2nd quarter to USD 1.30 per lb for the 3rd quarter, reflects an intact production is likely after the summer months. It does, however, have to be repeated that for some time now the Asian market does play a considerable part in price development and expectations. Looking at the first figures for the stainless steel production in Asia, 2010 seems to be more on the moderate side. This is in a context of a slowed down growth rate, but in comparison with a crisis hit Europe and USA, still a quite impressive growth rate. It can be surmised that after this “wanted” cooling down, a quicker increase in growth will be seen towards year end.