Nickel prices skyrocket to 18-month high

Arjun Patel

Introduction Nickel prices at the London Metal Exchange (LME) shot up to an 18-month high this afternoon, amid widespread concerns that production next year will be cut at Canadian Nickel - the worlds largest supplier of the metal. The company is cutting a third of its workforce in Eastern Canada and shutting down one of its plants ahead of an anticipated sale of the company. Union workers have threatened to continue strike action until April, which compounded concerns and the news today helped to push the LME trading price to a high of 21,175 per tonne. The news has bemused some City analysts, who point to no real shortage of nickel due to large stockpiles and a prolonged fall in European steel production - a key determiner of nickel demand. Prices, according to one commodities analyst, are being kept artificially high by proprietary trading desks, in an effort to improve their positions before the end of the year. Indeed, Canadian Nickel seems far from keen to ramp up production levels next year, despite record profits, a projected increase in demand from the steel sector, and the prospect of longterm supply deals in Asia next year. One nickel trader reported that a big trading house has told consumers in Japan and Korea that material will only be available next year if pay a lot more for it. In spite of all this, Fred Fox - the Chief Executive of Canadian Nickel - confirmed at a press conference last week that the cutbacks in the companys Eastern Canada operations are set to continue - both production and employment is set to fall by about a 1/3 by the current proposals. He insisted that the measures were the only way to save these plants. However, the companys record profits, and the Fox is butchering the company to tidy it up nicely in preparation for a sale, one union source told Reuters.

What caused it? What causes the nickel price rise Fall in demand from steelmakers, no shortage Bidding. No shortage, but contracts on stocks in London tied up Asian supply set to fall through A vested interest Possibly the prop. trading desks of the Canadian nickel corp industry itself.> they are well places to sell their company, with record profits. Restructring leading to Strikes, Job losses and CBA, despite record profits> in response to genereal fall in demand? However price may be artificially kept high. Chief exec Freddy Fox has a vested interested in this.

Worried Steelmakers