Demand for nickel in a period of tight supply is driving the price of the base metal sky-high. The spot price for nickel on the London Metal Exchange (lme) had risen to the $8.70(US)-per-lb range at presstime.
Nickel is relatively thinly traded on the lme, with the major producers preferring to sell directly to their customers. The lme started trading in nickel in 1979, with the metal hitting a high on the exchange (in the $3.25 range) later that year. Previous to 1979, a price of $7.40 was reported as the record high on the open market.
Less than a year and a half ago, in December, 1986, the going rate for nickel on the lme was $1.60.
Inventories are tight everywhere, with the majors reported operating at or near capacity. Giant Inco Ltd., which boosted its nickel production 20% in 1987 over 1986, is not expected to come close to matching that rate of increase this year. The lme, with a mountain of inventory during 1983 and 1984, is now said to be carrying ridiculously low nickel stocks.
Developments outside Canada at both Inco and Falconbridge Ltd. operations are affecting the nickel market. In Indonesia, Inco recently reported a temporary suspension of hydroelectric power generation and smelting at its P.T. facility following a break in a section of the canal system which delivers water to the power plant. The Indonesian facility produces nickel primarily for the Japanese market.
And in the Dominican Republic, the dispute continues between Falconbridge and that country’s government over an export tax placed on ferronickel production. Falconbridge continues to stockpile production while making the odd ferronickel shipment.
Demand for nickel used in the manufacture of stainless steel continues to be strong.
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