(Nickel prices are responsible for over 60% of the cost of stainless steel) / Disclaimer

(comment) A major correction of 40%, which in anyone's book is a 'huge' correction, would only take us back to January pricing levels, and still leave the price of nickel over 400% higher than they were when the bull market began in 2001-2002. But will it happen? We are hard pressed to find any legitimate reason why it should, but customers of stainless steel remain hopeful. Some of the price increases customers have seen for stainless steel product recently, are staggering, especially on projects that were quoted earlier this year. One reader told us this week, a stainless steel tank, that they had been quoted the first week in January, had just gone up by over 30%. When you are talking a $100,000 tank, that's a huge bite. Another reader advised us that he was seeing many of his major stainless steel projects put on hold, or cancelled. While the price increases are hurting consumers, the demand seems to be falling only in a few, selective areas. We spoke to someone in the plating industry a few weeks back and asked them if they were seeing current customers of stainless looking at 'plating over steel' alternatives. And while he said he was not seeing this among those already committed to providing stainless steel product in their current production and marketing brochures, they were seeing engineers responsible for designing new projects, who would have typically used stainless steel before, considering other options. The information out this week about Posco developing a new non nickel stainless got a lot of media attention, but a reader supplied us technical papers, that we posted on Friday, that show the Japanese have had a comparable product available for 25 years. At this junction in the road, there may be manufacturers that are willing to surrender some of the corrosion resistance that nickel bearing 300 series stainless steel offers, but it typically takes months or even years to test, engineer, order, and be supplied with any possible alternative material. And like the 200 series stainless steel that India is pushing, which comes in both low and high nickel content, new products do not come with the proven track record that 300 series stainless steel can provide. Talk to anyone old enough to remember, and they will tell you how difficult it was to convince customers to switch to the yet-to-be-proven 300 series stainless steel way back when. Today, one can point to the Chrysler Building, built in 1930, or the St Louis Arch, finished over 40 years ago, to prove the claims of corrosion resistance are legitimate. But it wasn't until the big push on quality hit the United States in the latter half of the last century, that manufacturers outside of the military really came to accept the increased price of 300 series stainless steel for use in civilian applications.

For the vast majority of those buying stainless, they bite the bullet and deal with the cards they are dealt. And while possible substitution changes will be a long range concern, rather than an immediate one, the price of nickel and its immediate effect on the price of stainless steel, is giving manufacturers just cause to start examining those options. Are there any immediate threats to the price of nickel? Very few, except possibly the increased importation of low nickel ore into China. But in the end, this new supply may only be a stop gap source that keeps the supply/demand deficit out of the critical level, and keeps any further talk of rationing muffled. What will happen is anyone's guess. But for those of us hoping for a major correction, it may be based more on a hope and a prayer, than the reality of the market.   

  Bottler - or miner? (comment - we wouldn't have given this story much thought until we read one particular statement) - sentence from article -"In 2005, the Framework for Responsible Mining, developed by NGOs, retailers, investors and technical experts, codified the right of communities to consent to operations on their land." - article here (so, is pumping water, a form of water mining?) - Water - The Ultimate Commodity (article here) and Drinking Water - Investors Perspective - article here  and one final - Pure water in the Desert - article here

  Resource World TV - Fundamental Research Corp - SCC Commodity Presentation - "Fundamental Research Corp Research Associate Martha Buckwalter-Davis, BA (Geology), gives a speech about the benefits of adding commodity exposure to you portfolio through an investment in junior resource companies. She also talks about how Fundamental Research Corp evaluates junior mining companies." - video here

  Book - China Inc -  released in 2005 (website here) Quote from review by Kirkus Reviews - "Fishman is a little alarmed by China’s growth, but also ready to comfort readers with the prospect of ever-falling prices thanks to its abundant low-wage labor pool. He is more alarmed, however, at a seeming codependency that is emerging, in which Americans buy Chinese goods with money that is in essence on loan from China. “The United States,” he warns, “cannot take on ever-bigger debt and amass huge trade deficits indefinitely.” A thought-provoking and accessible forecast of strange times to come."

  Not metals related - (comment - hasn't got much media coverage, for obvious reasons)  PBS Bill Moyers Reports - Buying The War - video here

It's probably nothing more than wishful thinking on our part, or maybe the bull has just gotten a little scruffy and needs a good trim, but we wouldn't be surprised to see a "major" correction in the price of nickel on the horizon. And yes, we know we are alone on this one.

  Canada's Commodity Price Update - pdf here

  Media release and update on Caldag Project - pdf here

  Sherritt gobbles up Dynatec creating a laterite powerhouse - "During the past two years, one could safely say that the only sure things in life are death, taxes, mining takeovers and a rising price of nickel." - article here

  Samancor counters pollution allegations - "Ferrochrome producer Samancor Chrome has denied claims that its measures to remove a carcinogenic substance from groundwater in the areas surrounding its Tubatse ferrochrome plant were inadequate, and that residents of the Steelport area, in Mpumalanga, were not made aware of the pollution." - article here

  News Bites - "China - Raw Material of Stainless Steel is Facing Surplus" " Philippines Exported 5.6 Million Tons Of Nickel Ore In 2006" "Combined General Meeting of 25 April 2007, Appointment of Patrick Buffet as Chairman and Chief Executive of Eramet Group" "South Korea's Posco Wednesday said it has developed a new nickel-free stainless steel product, which is about 50% cheaper than current stainless steel products that contain nickel"

  New heyday for Indonesian mining industry? - "The global mining industry is booming. Prices of mining commodities, which have been on the increase over the past several years, have sharply risen since the middle of last year thanks to rising demand from new economic giants China and India." - (article here) - Indonesia Prosecutor `Certain' to Appeal Newmont Case - "Indonesian prosecutors will appeal to the Supreme Court a verdict that acquitted a local unit of Newmont Mining Corp. of charges it polluted a bay, prolonging a case against the world's second-largest gold miner." - (article here)

  Today's beginning nickel inventory - plus 528 tons = 4,842 tonnes (29.00% - 1,404 tonnes cancelled warrants).

  Indications at 7:55 am CST show nickel selling at $.24/lb higher  . Well after a market last week, that seemed to move with no rhyme or reason, this week seems to be following a more established path. With all of the extremely bullish news out the past few weeks, including more last night, the nickel market soared again today, and at one point set a new all time record high of $22.77/lb, beating the old record of April 10th by a few pennies a pound. Current indication puts the market about $.14/lb below the new record. More Voisey's Bay contractors are on strike, nickel consumption figures for China show imports soaring, and Newmont is off the hook in Indonesia. Been a busy news day already, and the US markets are just opening. Could prove to be a very interesting day.  (Bloomberg - more) (Reuters - more)

  Rand Merchant Bank - Weekly Base Metal Reports - pdf here

  BHP Ravensthorpe Build Nearly Complete; Projects On Budget - "BHP Billiton (BHP) said Tuesday construction at its Ravensthorpe nickel project in Western Australia had surpassed 90% of completion, while almost all of its development projects were within budget and on schedule." - article here

  2nd group launches strike at Voisey's Bay mine - "For the second time in a week, a group of support staff at the Voisey's Bay nickel mine in northern Labrador has walked off the job." - article here

  News Bites - (Reuters from article 'Earnings Preview: United States Steel') "In industry trends, stainless steel demand in the quarter rose about 40 percent in China, wrote Prudential Equity Group LLC analyst John C. Tumazos in a recent client note." (Bloomberg) "Imports of the metal (nickel) used in stainless steel into China, the world's largest user, gained 5.5 percent in March to 7,740 tons from the same month last year, according to government data published yesterday. For the first three months, imports jumped 47 percent." (Dow Jones Newswire) - "China may satisfy nearly 60% of its nickel needs through imports of low-grade nickel ore for conversion into nickel pig iron, says ABN Amro. Notes, as low-grade ore imports in 1Q rose to 2.2 million tons from 3.78 million tons in all of 2006, annualized imports would be 8.8 million tons, displacing about 170,000 metric tons of nickel pig iron. "Just three years ago (such) imports were negligible but now they could be pivotal."

  Outokumpu first quarter 2007 interim report - pdf here

  Western Areas to become major Canadian nickel producer - update - "Australian-based Western Areas Nl positions itself as the largest Canadian-listed nickel producer, its managing director Julian Hanna says it was luck that paved the company's entry into North America." - article here

  Commodity prices to remain strong, forecasts IMF - "There will be no relief from high commodity prices anytime soon. Following last year's trend, world commodity prices are expected to continue to remain strong this year, International Monetary Fund (IMF) forecast in its latest Global Economic Outlook 2007 - Spillovers and Cycles in the Global Economy" - article here

  Oriel begins Ferrochrome production at Tikhvin - "London-listed mining firm Oriel Resources has started producing steelmaking additive ferro-chrome at its Tikhvin plant in Russia, the company said on Tuesday." - article here

  Indonesian Court Acquits Newmont, Ness of Pollution - "An Indonesian court acquitted a local unit of Newmont Mining Corp., the world's second-largest gold miner, and a U.S. executive of charges they polluted a bay in the Southeast Asian nation with mercury and arsenic." - article here and another

  Universal Stainless Reports Record Sales and Earnings for 2007 First Quarter - article here and AK Steel Reports Net Income of $62.7 Million for First Quarter of 2007 - article here

  BHP Billiton posts record base metals output for first 9 months - "Anglo-Australian resources giant BHP Billiton Tuesday reported record production of alumina, aluminium, copper, nickel, iron ore and manganese ore for the nine months ended March 31, 2007, underpinned by strong customer demand." - article here and another

  Jiji Press Ltd News Bite - "Japanese steelmakers are set to face cost increases of 700 billion yen in fiscal 2007 due to higher prices of raw materials much as zinc and nickel, Japan Iron and Steel Federation Chairman Hajime Bada said Monday." (according to Google, that is equivalent to $5.89821368 billion U.S. dollars)

  Today's beginning nickel inventory - plus 240 tons = 4,314 tonnes (31.43% - 1,356 tonnes cancelled warrants).

This site is by no means a radical pro-mining site. In fact, nothing gives us more enjoyment in life than taking on 'radicals', no matter which side they choose. We know we can't win, because a radical defines truth in their own mind. But we can usually make them look as foolish as they are. We pass on the news as it comes, ever mindful of the fact, that there are always two sides to every coin. The media tends to give their attention to those who make the most noise, and as Mr Sudol stated in his aforementioned article, that is almost always the anti-mining groups.  Mining is a vitally important part of our world economy, and for those who are mining responsibly, it's time to show the public what you are doing. The documentary "Mine Your Own Business" caught the NGO's off guard and forced them to spend a lot of time doing damage control. If this is the best the industry has got, it should prepare itself to do a lot of damage control of its own. The world is shifting its attention to Global Warming in a big way, and this will inevitably bring back the strong environmental movements of the past. Any NGO will tell you...it's much easier to be on the offense, than trying to play defense. Sun-tzu stated in 'The Art of War' - "if your enemy is angry, irritate him". Can you think of a more angry lot than NGO's? (example - recently a Canadian mining company, Skye Resources, who has purchased a mine in Guatemala, got some very negative press when it had the local police remove squatters off its property. While not one single person had to be physically removed, or was harmed in any way, the NGO's took their video of burning huts and angry Mayan's, and decried the "violent" expulsion of these people from their native lands. In public discourses between the president of this mining company and one of the militant anti-mining witness' to the event, the following was admitted by the NGO "I have visited Cerro 400 and you are correct in stating that, had I not been told, I would never have known that the area had been mined and reforested." That is something the NGO's do not want the public to see.) 

  What do you get when you give an artist 110 tons of mirror polished 316 Stainless (containing 12% nickel)? - At Chicago's Millennium Park you get 'Cloud Gate', or as the citizen's lovingly call it, The Bean - photo's here 

  A few video clips from PBS "Indonesia's War Against Terrorism" (3 clips from an hour long show that aired this week) - video here (We watch events in Indonesia closely as a lot of nickel is shipped from our planet's youngest democracy)

  Poll Finds World Publics Reject U.S. Role as the World Leader; Majorities Still Want United States to Do its Share in Multilateral Efforts - report here

  CNN Worldwide Gun Violence Map - here  Current price of uranium - here  

Let's look closely at the week, thus far. Some felt the gain in nickel inventory recorded yesterday was bearish. Really? Last Friday there was 4,374 tonnes of nickel being stocked in LME warehouses. Today, there are 4,266 tonnes recorded. Yesterday, the WBMS recorded nickel consumption grew by 20% worldwide, and production grew by 6%. That means more nickel is being consumed, than is available, and this after a year of the same situation. We thought that was the primary reason why nickel prices had been driven so high, the whole supply and demand thing? Manufacturers have been threatening to produce stainless with less nickel, but the WBMS figure mentioned before, doesn't reflect this actually happening. The dollar has been taking a beating this week, which was given by some analyst's, as the primary reason why nickel prices rose during a long period, earlier in this bull run.

Today, China reported its GDP grew faster than expected, so everyone immediately assumes that whatever step China will take to cool their economic growth down, could be bad for nickel consumption. How many times has China raised its interest rates in the last year, and what effect has it had on nickel, one way or the other? What analysts really need to be worried about, is what will happen if the 1.3 billion Chinese, decide to quit saving 50% of their new found wealth, and start spending a larger percentage of it. And today, support personnel at Voisey's Bay went on strike, after we reported last weekend that a CVRD official confirmed that any strike would effect production. The market reaction? Nickel fell. This story isn't getting any attention, which makes us feel rather foolish, as we have been keeping our readers updated on it for the last few weeks.

So why do we care? Primarily because we try to offer the news and a brief analysis on what happened during the day, and for the last few days, we have had no "analysis". And while many of our readers are those with an interest in nickel, from the producers point of view, many of our readers are, like us, looking at this situation from the nickel consumers point of view. We would like to offer something besides articles for those who come here trying to figure out where their stainless steel prices are heading, and saying "oh, it's most likely goin up", without offering some kind of practical reason, is worthless. We  kind of feel like we missed a big meeting somewhere, were the fundamentals of the market were re-defined. After all that, we apologize to our readers for expressing our frustration, and for not being able to offer any legitimate reason for why the market is presently doing what it is doing. 3 month nickel ended the day at $21.56/lb ($47,525/tonne)  (Dow Jones - more)

  Oxiana changes its mind about nickel - "OXIANA is eyeing nickel projects - including costly, complex laterite developments - after completing its $415 million purchase of Agincourt Resources." - article here

  Feeling Fuelish? The fast-growing ethanol market could lose some of its luster for producers and distributors of stainless steel. - "President George W. Bush’s State of the Union pledge to boost the supply of renewable and alternative fuels seven-fold, to 35 billion gallons by 2017, cheered not just ethanol producers, but also stainless steel suppliers whose growth last year was largely sparked by the boom in ethanol plants." - article here

  Update! Voisey's Bay support staff launch strike - "Several dozen support workers at the Voisey's Bay nickel mine in northern Labrador have launched a strike, and more may soon follow." - more here

  Indications at 7:50 am CST show nickel selling up by $.07/lb .  (all 3 indicators we monitor show up) (Bloomberg - more) (Reuters - more)

  Base metals pressured by China concerns - "Base metals came under pressure on Thursday amid concerns that China will be forced to raise interest rates to cool rapid growth in its economy." - article here and another

  Damstahl Stainless Steel Report - April 2007 - pdf here

  Piping & Equipment Inc - Quarterly Metals Bulletin - pdf here

  Rio Tinto Nickel Mine Plan Mostly OK - Indonesia Min - "Indonesia and Rio Tinto Ltd. (RTP) have overcome two key obstacles that have held up the Anglo-Australian company's plan to build a $1 billion nickel mine on Sulawesi island, Energy Minister Purnomo Yusgiantoro said Thursday. " - more here

  News Bites - "Xstrata Receives Australian Competition Clearance for LionOre Offer" "Howson selling Metal Stocks (here)" "Jupiter Mines to Purchase Dordie South Nickel Project in Widgiemooltha" "Metal Bulletin - Nickel deficit seen until 2010 - Nickel Institute"

  “New 200-series” steels: An opportunity or a threat to the image of stainless steel?" by International Stainless Steel Forum  - pdf here

  Sumitomo eyes $1-B nickel plant in Mindanao - "Trade and Industry Secretary Peter Favila on Wednesday hailed a plan of Sumitomo Metal Mining Co. Ltd. to put up a nickel-smelting project in Mindanao worth $1 billion, saying projects like it were “very welcome as long as they comply with our various laws.” - article here and another

  US ferromolybdenum prices expected to rise - "Ferromolybdenum prices have stabilized in the US market thanks to the exports restriction of the alloying material in China." - article here

  News Bite - "Shanxi Taigang Stainless Steel Co Ltd said it expects its unaudited net profit in the first quarter this year to have risen between 750 to 800% year-on-year." "Japan's 5th largest iron and steelmaker, Nisshin Steel Co., Ltd., announced that it would build a new subsidiary named Rihong Stainless Steel Co., Ltd. in Shanghai, China" "China's GDP grows 11.1% in first quarter" " Taiwanese Mills to Raise Stainless Steel Prices in May"

  Today's beginning nickel inventory - minus 192 tons = 4,266 tonnes (32.49% - 1,386 tonnes cancelled warrants).

Stainless steel has seen numerous increases during the quarter, and the most recent increases have been incredibly depressing. What the next quarter will bring has yet to be determined. Stay tuned and we will keep you informed.

  Saturday - The contract CVRD Inco and Local 2020 of the United Steelworkers expires at midnight tonight - Local 2020's 330 CVRD Inco members include surveyors, ventilation technicians, geologists, environmental analysts, purchasing, payroll, water treatments operators and office administration.(this is CVRD's first big test in negotiating with its Canadian workers since purchasing Inco. Xstrata has successfully reached two major agreements, one with Local 2020 and the other with CAW Local 598, in the last two months)

  Analysis-New projects, mergers to puncture nickel's rally -"Soaring nickel prices have helped spark a rash of multi-billion dollar corporate takeovers and new projects in mining, though few, if any, believe such lofty metal prices will last." - article here

  Newmont mulls Indonesia future if exec found guilty - "Gold miner Newmont Mining Corp. might reconsider its investments in Indonesia if one of its executives is found guilty of dumping toxic waste there, the company said on Friday." - article here

  Mines hit by a lost generation of miners - "They are calling them the lost generation, the men and women who simply aren't around to staff the world's booming mining industry." - article here

  The Jeweled Nickel - (quote from article) ""The government is definitely resolved to acquire a portion of Norilsk Nickel stocks, and if ALROSA doesn't become the buyer, it will be some other state company," said a source close to Norilsk Nickel, specifying the parties last met in late past summer to discuss legal and economic aspects of the deal." - (article here) Ferrous Metallurgy 2000-2004 - "The four years of Vladimir Putin's presidency were very favorable for the Russian metallurgy industry. Growth began in earnest in 2001, when a surge of investments was recorded. Steel production increased 1.9% to 59.9 million tons in 2002, and production of rolled metal increased 3.8% to 48.5 million tons." - (article here) 

  Russian juice ad pokes fun at billionaire's detention in France - "He is one of Russia's wealthiest men and he gained notoriety over the New Year holiday when French police detained him briefly as part of a probe into an alleged high class prostitution ring." - (article here)

 Hunting for the lion's share of the nickel jungle - "The challenge Although Xstrata Nickel is just seven months old, CEO Ian Pearce wanted to expand quickly The call An all-cash deal for LionOre gives the miner a foothold in 'the global nickel play'" - article here

  China Nickel Statistics for February 2007 - Nickel Exports total - 1,831 tonnes (Destination - South Korea 1,578, Singapore 102) Nickel Imports total - Refined Nickel - 12,087 tonnes (Origin - Canada 4,944, Australia 6,594, Russia 1,766)  Nickel Ore - 573,516  tonnes (Origin - Indonesia 477,882, Philippines 46,527, New Caledonia 39,551) (source - Star Futures)

  Non metal related - Wonders of the Chinese Landscape - beautiful pictures here   Midwest US thunderstorm photo's here  

All prices, unless marked official closing prices, are indications only of LME 3 month buyer traded prices and courtesy newswire services. To understand what our prices mean, see "A Guide To LME Trading"...pdf here or "The ABCs of a Metals Exchange" ...pdf here (Molybdenum prices are for molybdenum oxide, an ingredient and major price factor in 316 stainless) (all ton listings are metric tons = 2204.6 pounds ) Updated daily before 8 am CST and around 12:45 pm CST weekdays, with some weekend updates - Disclaimer