Goldman Sees Nickel Support at $17,000 on Slowing Inventory Gain

Nickel is strongly supported at $17,000 a metric ton as a result of slowing stockpile gains, refined metal trading at a discount to nickel pig iron and squeezed NPI margins, according to Goldman Sachs Group Inc.

The metal will trade at $22,000 a ton over the next six to twelve months, driven in part by higher marginal costs, Goldman analysts including Max Layton and Roger Yuan wrote in a report dated yesterday, repeating a forecast from July. Prices touched $16,483 yesterday, the lowest since April 9 and near to a bear market, before closing at $17,125.

Nickel rose for the first time in a week yesterday after a government official said the ore-export ban in place since January will be maintained in Indonesia, the biggest producer of the mined metal ore. Goldman joins banks such as UBS AG and Macquarie Group Ltd. in maintaining outlooks for a higher nickel price over the next year in large part as a result of the Indonesian export ban.

“We expect the NPI cost to rise further due to expected tightness in laterite market,” Roger Yuan said in a separate e-mail today.

Edi Prasodjo, a director at Indonesia’s Energy and Mineral Resources Ministry, said yesterday the country was at “the point of no return” on the ban, implemented to create more domestic smelting capacity.

Indonesia Ban

Higher processing costs as a result of the Indonesian restriction will shift prices higher and the metal may trade between $22,000 and $25,000 a ton in 2015, Jim Lennon, a senior consultant to Macquarie said yesterday.

Nickel and natural gas are seen as the most preferred commodities in the next three to six months, UBS said in a report yesterday. The bank sees a larger market deficit in 2015 for the metal.

Australia’s Bureau of Resources and Energy Economics said in a report today nickel may average $18,250 a ton in 2015 in a report today. Prices will moderate in the fourth quarter this year on increased production from the Philippines, continued high stocks and slowing Chinese demand, BREE said.

Nickel for delivery in three months on the London Metal Exchange rose 0.2 percent to $17,150 a ton at 11:32 a.m. in Hong Kong.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE