LONDON, Nov 30 (Reuters) – Nickel prices may see a short-term lift over the next several months due to a seasonal rise in demand for stainless steel, but next year’s outlook is burdened by another market surplus.
Nickel, a component in stainless steel, has already seen benchmark prices on the London Metal Exchange shake off a weak performance this year, running ahead of other metals in recent weeks.
This may persist into early next year, but prices will soon be overwhelmed by output from major new mines gearing up and a surge in Chinese pig iron output fuelled by cheap Asian ore.
“There could be a little bit of seasonal pick up, but I struggle to see how nickel prices can improve significantly next year,” said Nic Brown, head of commodities research at Natixis in London.
“You are going to get substantial amounts of cheap nickel ore coming from both Indonesia and the Philippines, as things currently stand, on top of the additional supply from some of these big nickel projects around the world.”