This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

“Misunderstood” Nickel Could Rally In 2013

"Misunderstood" Nickel Could Rally in 2013With the price of nickel down around 7 percent and year-end stocks in LME warehouses at their highest levels since May, investors in the base metal were hard-pressed to find good news in 2012. However, price-positive developments could be around the corner, according to analysts, who predict that the surplus of mined nickel forecast to come onto the market from China and elsewhere is overblown.

A recent report from Citi Research states that "fundamentally misunderstood" nickel suffers from a "reputational deficit amongst many in the analytical community" because of assumptions made about its oversupply.

These assumptions include the fact that every year for the past five years, a "wave of supply" has been due to hit the nickel market — however, that wave has failed to materialize, mostly as a result of failed production estimates.

Underperforming nickel assets in 2012, notes Citi, include Vale's (NYSE:VALE) 53,000-tonne-per-annum (tpa) Onca Puma ferronickel operation, which needs a complete furnace rebuild and is unlikely to restart until mid-2013; Anglo American's (LSE:AAL) 40,000-tpa Barro Alto ferronickel operation, which suffered a kiln sidewall collapse in October; and up to 50 percent of Chinese nickel pig iron production reportedly being shuttered due to low nickel prices.

In addition, Russian miner Mechel (NYSE:MTL) said just before Christmas that it will be closing its South Urals nickel plant due to a "slowdown in demand for the metal and what the company regarded as a 'bleak' outlook for price recovery in the near future," reported The Australian.

As a result of this "supply failure," as well as other factors, including low stainless steel inventories in Europe and China (nickel is a key ingredient of stainless steel), Citi expects nickel to rally to $21,000/tonne in the first quarter of this year — a 19-percent increase over the current LME price of $17,540/tonne. The research group expects nickel to average $21,770/tonne in 2013 and rise to $24,400/tonne in 2014.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%
YHOO $27.97 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs