In the third instalment of our 2015 Commodity Outlook we're taking a look at nickel, where prices are solid thanks to a supply deficit
In the third instalment of our 2015 Commodity Outlook we're taking a look at nickel, where prices are solid thanks to a supply deficit. Think nickel and you typically think of volatility. Since 2005 the metal has been wracked by skyrocketing highs and deep declines that have caused an exodus from the sector by many of the larger players. Much of this was due to a fall in stainless steel demand, working inversely to the growing demand for construction steel. After reaching record highs of $50,000/t prior to the GFC, nickel prices plummeted as global economic growth slumped during subsequent years. The good news is that the future is now looking more stable for nickel, with the softer Australian dollar providing a bonus for Australian nickel producers. We anticipate a significant supply deficit during 2015, with shortages to continue through to 2017. Furthermore, there are no new large-scale nickel projects coming on stream, which will only add to the pace at which supply and demand pressures must invariably spike a price rise.
Gavin has been a senior resources analyst following the mining and energy sectors for the past 25 years, working with Intersuisse and Fat Prophets. He is also the Executive Director, Mining & Metals with Independent Investment Research (IIR).