News

March 26, 2007

One Goes Up While Another Comes Down

By Rob Davies

A 12 per cent fall in spot nickel prices last week is a strong reminder of how volatile metal prices can be, especially when they are at amazingly high levels. Even so, a closing price of US$45,605 a tonne is not bad in anyone’s language. As the end of the first quarter draws near there is every prospect that nickel will be able to record an average price for the quarter of over US$40,000 a tonne, not something many analysts would have predicted even a few years ago. Moreover, the news flow from the supply side remains constructive for prices, even if individually it is painful for the operator concerned.

The most recent piece of news is that European Nickel has still not got permission to clear trees at its Caldag project in preparation for mine construction. Although it won’t be a big producer it is just another element keeping the market very tight. The reported reason for the fall in nickel prices last week of an increase in stocks is almost risible. At less than 5,000 tonnes LME inventories are irrelevant to all intents and purposes.

On the other hand copper had a good week. Its ten per...