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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

“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

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,960.57 -123.23 -0.72%
S&P 500 1,978.34 -9.64 -0.48%
NASDAQ 4,449.5640 -22.5440 -0.50%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs