The mystery of the London Metal Exchange has left the world's nickel mining in trouble.
The latest figures from the International Nickel Study Group show a sharp 22 per cent year-on-year increase in global nickel production in January, despite an overall decline in December.
At the current rate, mine nickel production is on track to exceed 3.2 million tonnes a year. The surge is largely due to continued growth in Indonesian production, which rose more than 40% in January from a year earlier.
Demand for refined nickel in January contracted 5% month-on-month and rose 2% year on year. The January figure equates to an annual demand of 2.8 million tonnes, based on a consumption surplus of 255,000 tonnes, Montreal Capital Markets said.
Since the beginning of this year, the nickel price has fallen. Recently, the gap between the spot price of London Metal Exchange and the futures price of March reached 362 USD/ton, the highest since December 2007, indicating the lack of demand in the spot market.
PB Corp, a key materials market intelligence firm, said trading liquidity should increase during the Asian session and nickel prices should better reflect market fundamentals. Because, the next 3 months, nickel prices should gradually return to normal.
On Thursday, Glencore said in its annual report that the large surplus of non-LME grade nickel had stimulated the conversion of these products into ice nickel and nickel sulfate, both for battery grade and for LME grade nickel feedstock.
