Western Australia was at the centre of the nickel market recovery. WMC set the ball rolling, deciding to chop some of its unprofitable Kambalda production. Then the new trio of WA laterite mines failed to live up to early expectations, creating a further dent in the supply chain.
The other side of the coin was the strong recovery in Asia’s stainless steel sector — a major consumer of nickel. In November 1999, metals giant Sumitomo Corp estimated that Japan’s primary nickel consumption would grow 10% in calendar 1999 to 179,300 tonnes.
According to London-based stockbroker HSBC Securities, nickel has the strongest fundamentals of any of the base metals.
“We expect the nickel market to remain in deficit next year, and there is a real possibility that a chronic shortage of metal could develop,” HSBC said in a recent study.
The broker added that relatively low inventories would ensure ongoing price volatility, with spikes towards $US4.50/lb on the cards. It forecasts an average price of $US3.65/lb for the year 2000.
