Market Briefing - December 7, 2006

LME inventories, now at 6,048 tonnes (Dec 5), remain the key factor in support for nickel prices, their continued downtrend has pushed prices back above $35,000/tonne after dropping to $29,995/tonne on November 15. Further support has also come from the continued strike at SLN’s New Caledonia mine (now in its third week), as well as news of further delays to major nickel projects set to come on stream.

High prices and low stock level have in turn supported premiums, which remain relatively stable as consumers begin booking 2007 contracts at higher rates and volumes than those seen this year, on the potential for stronger demand moving forward. Premiums for melting grade nickel in the US held firm for much of the month at between 42-47 c/lb, but have since slipped slightly to 39-42c/lb. While plating grade nickel premiums remain within the 61-65c/lb range. High prices also continue to push stainless steel surcharges upwards for December. European alloy surcharges on austenitic grade stainless steel have been raised by both Thyssenkrupp and Ugine & ALZ to €2,161.

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