cliffvb: LIM has been a winner for me .... but I question whether these high nickel prices are sustainable with lots of new supply coming online in 2007. Of course, the experts have been notoriously inaccurate in forecasting prices, but here's a very bearish forecast made back in September .... so far this guy is dead wrong as nickel is still making new highs, but that new supply will inevitably arrive ....
Nickel forecast to crash in ‘07
By Tom Stundza -- 9/6/2006 7:15:00 AM
Booming demand from makers of stainless steel has pushed nickel prices to all-time highs this year. But, Westpac Banking senior economist Justin Smirk forecasts that prices of the alloying metal will plunge next year as slower U.S. growth curbs demand and mine and smelter expansions increase supplies. “The key is the downturn in U.S. dwelling activity and the impact of a more cautious U.S. consumer,' economist Smirk writes. 'In 2007, industrial production growth will turn from being a pillar of base metal price inflation to a drag.' For the first eight months, spot nickel traded on the London Metal Exchange (LME) has averaged $20,266 ($9.19/lb). World nickel for spot delivery surged one day in late August to $34,750/metric ton ($15.76/lb), its highest level ever. But, Sydney-based Westpac Banking believes that LME spot nickel prices could end up somewhere between $17,845/metric ton ($8.10/lb) and $22,919/metric ton ($10.40/lb) this year, and then drop to $14,350 ($6.50) in 2007. A survey of brokerages and research companies by Access Economics of Canberra, Australia, found analysts expect nickel prices to fall as much as 45% over the next two years to just under $12,600/metric ton ($5.70/lb) by the end of 2008, due to expanding capacity. Westpac's report also says rising interest rates globally will help to slow raw materials demand in the months ahead. The Federal Reserve raised interest rates 17 times over two years before pausing on Aug. 8. The Bank of Japan raised interest rates in July, the first time it has done so since August 2000. The European Central Bank has raised borrowing costs four times since early December.
AI
