Morgan Stanley Reduces Nickel Price Forecast for H2

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Morgan Stanley Analysis NickelBanking firm Morgan Stanley reduced its price forecast for nickel for this year’s second half on Tuesday, Mining Weekly revealed, citing a report by Reuters.

Despite rising demand from stainless steel parts manufacturers, the bank cut its price forecast for nickel this year by 12 percent to $13, 228 per tonne for the third quarter, and 10 percent to $13, 448 per tonne for the final quarter.

Bloomberg revealed in a separate report that nickel was dragged down by the stainless steel sector, which consumes 70 percent of the metal’s global output. The metal is threatened by a slowdown in economic growth as stainless steel sector “respond” by selling stocks cheap, the banking firm said, according to Bloomberg.

The bank recommends buying metals “over bulk commodities such as steel, iron ore, and coal” up to December due to the possibility of stimulus packages being implemented by the United States and China. The bank is also optimistic about a possible rebound in oil prices and global growth.

“Any sustained second-half recovery event would need a surprisingly large stimulus event in China or the U.S.,” Morgan Stanley analysts Tom Price and Joel Crane wrote in their report. “Which commodities would respond the most in this scenario? Metals.”

The analysts also said in the report that while “they were warming up” to aluminum and nickel, they are “bearish” about the prices of other metals.

Aluminum prices would be up from $1,823 in 2015 to $1,979 a metric ton in 2016. On the other hand, platinum will be down by 8 percent to $1,151 per ounce during the second half of this year, and would recover slightly to $1,175 next year.

Nickel prices have become volatile again due to speculations that Indonesia would soon relax its export ban on raw minerals, Forbes reported. The business news outlet explained that nickel prices would further decline if Indonesia lifts its ban, which it established in 2014 to bolster domestic mineral production.

The country has already eased its limitations on copper exports, and is also considering doing the same for bauxite, a raw material source of aluminum. Experts speculate that unprocessed nickel exports will be next.

“It is remarkable that the Indonesian export ban only led to a short-term nickel price increase,” Hellenic Shipping News noted in a separate report. Hellenic Shipping News added that there are reports, “not confirmed or backed by evidence, stating that Indonesia has been illegally shipping nickel despite the ban, thus, boosting the global nickel supply.

The website also said China “used part of its vast nickel reserves when the nickel price was high in mid-2014 hence putting downward pressure on the international nickel price.”

Despite a potential downward movement in nickel prices, nickel exploration and mining firms are bullish that prices will be back in the pink of health.

Amur Minerals Corporation (AIM:AMC), a British-owned company with a large nickel-copper sulphide project in the Russian Far East, would be “accelerating its production plans,” according to a report on Proactive Investors.

The company has just received its “Detailed Exploration and Mine Production Licence” from Russian authorities and has just submitted its pre-production plans called “Proekt” to for approval to move its project into production.

Meanwhile, in Australia, St George Mining (ASX:SGQ) has raised a funding of $1,400,550 from the issue of 20,007,864 ordinary shares and together with 6,669,288 options exercisable at $0.20 on or before 30 June 2017, Proactive Investors Australia revealed. The funds will be allocated to a high impact drill campaign of nickel sulphide targets at the company’s East Laverton project in Western Australia.

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