Nickel demand is expected to weaken in 2008. Steelmakers fear that the global credit squeeze will depress demand for steel and that high energy and raw materials costs will expose them to losses.
World Commodity Forecasts via NewsEdge :
Nickel demand is expected to weaken in 2008. Steelmakers fear that the global credit squeeze will depress demand for steel and that high energy and raw materials costs will expose them to losses. There are thus only limited plans to raise production, and steelmakers are keeping material purchases to a minimum; even if they had the confidence to rebuild working stocks, they would find them difficult to finance.
As a result, the steel industry is operating on a hand-to-mouth basis. Buyers enter the nickel market frequently but place only small orders. There has been no rush in Germany to recover from the 275,000-tonne cut in stainless steel production in 2007. There are reports that ThyssenKrupp’s Italian subsidiary has been operating at 2006 levels after reductions last year, and nickel consumption in Italy has been running at around 10% lower than 12 months ago. Further north, a recovery in nickel demand in Finland has been offset by a further decline in Sweden.
China’s steelmakers are still increasing orders
At the beginning of 2008 the immediate outlook for sales by Chinese steelmakers was uncertain, but by the second quarter orders were growing strongly, and there was a surge in imports of nickel ores and concentrates. Landings were 55% higher in April than in March, and quantities in the first four months as a whole were 47% higher than in the corresponding period in 2007. Imports of smelted and refined nickel in April were almost 10% higher than in March.
The decline in Japanese demand more than offset strong growth in China
Consumption has remained low in most other countries. The total is down even in Asia; the decline in Japan was greater than the increase in China, and there were substantial falls in consumption in South Korea and Taiwan. The nickel-using industries have a history of robust growth, partly because of their spread among both consuming and investing sectors (high oil prices may reduce consumer spending on durable goods, but they stimulate investment in nickel-using production and process equipment). This has enabled nickel’s largest customer, the stainless steel industry, to grow during recessions as well as booms, tripling output in the past 20 years.
Nickel demand remains inherently robust
Despite likely overall declines in Japan and the US, the Economist Intelligence Unit still expects some improvement in global demand in 2008; total consumption is forecast to reach 1.46m tonnes, led by China and by a recovery in the EU and in smaller Asian markets. Consumption will also increase in new markets such as Brazil and India, but their additions are small in relation to world demand. While the effects of the credit squeeze will continue to affect demand in the early months of 2009, we expect a stronger recovery later in the year, which could raise consumption to 1.5m tonnes. Nickel demand is expected to grow more strongly in 2010, up by 75,000 tonnes in that year, owing to stronger economic growth in the OECD.
Refined nickel: consumption
(＇000 tonnes nickel content unless otherwise indicated)
2006 2007 2008 2009 2010
EU27 436 422 431 437 440
China 240 328 362 375 394
Japan 181 196 169 177 205
US 144 162 158 164 172
Taiwan 107 76 82 90 95
South Korea 93 71 75 82 85
Others 193 167 181 181 189
World total 1,396 1,421 1,458 1,505 1,580
% change 6.0 1.8 2.6 3.2 5.0
