METALS FOCUS - Nickel premiums continue to rise amid tight conditions -
CalyonBaseMetals.com
Nickel Surcharges Rise to Record on Use, Inventory, Calyon Says
By Brett Foley
May 2 (Bloomberg) -- Nickel
surcharges paid by stainless- steel makers and other users of the metal rose to
a record because of soaring demand from China and dwindling inventory, said
Calyon, the investment-banking unit of Credit Agricole SA.
The average surcharge for Europe, the U.S. and Japan is $1,355 a ton,
Calyon's London-based metals analyst Michael Widmer said in a report yesterday.
The surcharge, known as a premium, is paid by users on top of the
benchmark London Metal Exchange price to release metal from warehouses. Changes
in premiums typically reflect the availability of metal in key trading
locations such as Rotterdam and Singapore.
Stockpiles of nickel, which is mostly used to make stainless steel,
have slumped 82 percent on the past year. Demand for stainless steel in China
and delays to new nickel projects have contributed to ``tight'' market
conditions, Widmer said. Nickel prices on the LME rose to a record on April 24.
``Stainless-steel production in China is sucking up so much of the
available nickel that everyone else has difficulty finding the material,''
Widmer said yesterday in a telephone interview.
The average premium paid in U.S. locations was $1,400 a ton, $1,764 in
Europe and $904 in Japan, Widmer said.
China's output of stainless steel may rise 37 percent this year to
7.35 million tons, metals research firm Heinz H. Pariser said March 21. Delays
and cost increases have affected nickel projects under development by BHP
Billiton Ltd., the world's largest miner, and Brazil's Cia. Vale do Rio Doce.
New nickel production won't be enough to meet increasing demand due to
underinvestment in previous years, Widmer said. Output and demand will be
``roughly balanced'' this year, he added.
Calyon is among the 11 companies that trade on the LME's dealing
floor.
To contact the reporter on this story: Brett Foley in London at
[EMAIL PROTECTED]
Last Updated: May 2, 2007 05:05 EDT
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