The economic news out of the U.S. continues to bewilder, but at the same time, motivate traders. It is becoming increasingly apparent that the government is willing to take whatever steps it feels necessary to keep the economy rolling, and rumors of some type of government bail-out were topic one this morning in London and around the world. LME markets were closing just as President Bush was making his announcement, and it will be interesting to see how traders react Monday, after a weekend of analysis.  The U.S. housing market itself, has a marginal effect on the nickel industry as a whole, but the fallout from the subprime problem could have economic effects down the road, if not handled properly. The government is in firefighter mode now, putting out the smaller fires before they turn into a major blaze. Analysts can disagree about the success or failure so far, but if you gauge it by investor sentiment, they are staying ahead of the game.

And there is the rumor that, despite all the producer statements, stainless steel production may be turning a corner, and has seen the worse. We will have to wait and see if this proves true, but hopefully, it doesn't get any worse. It appears a floor was established, so if nickel buyers need to buy, they will probably be doing it soon - unless nickel tanks again next week. This week, tank was not in the vocabulary. Nickel had a big day, and the official closing prices posted above are the highest since August 2nd. Prices eased a little after breaking thru the $30,000/tonne mark, but still ended much higher than yesterday. Three month nickel ended the day,week, and month at $13.51/lb ($29,795/tonne)  (Dow Jones - more) Considering it ended July at $14.25/lb, nickel ended August $.75/lb lower after a fairly volatile month.

US and Canadian markets are closed on Monday, but the LME will be open. We will run a daily update as normal. Have a great weekend!

  Nickel Rises to 1-Month High on Mill Speculation; Copper Gains - "Nickel rose to a one-month high in London on speculation that stainless-steel mills will increase purchases in the final quarter. Copper and all other metals advanced." - more here

  China's steel consumption to go weak this year - "Steel consumption is expected to be weakened this year, especially in the remaining months, said an official with the China Iron and Steel Association." - more here

  (excerpt from Chinese article) Imports of molybdenum into China thru July have slipped 43.5% YOY (5349 tons compared to 9467), and molybdenum ore has dropped 46.8% YOY (3907 tons compared to 7349 tons). (note - yet to find a secondary source to comfirm this)

  Indications at 7:50 am CST show 3 month nickel selling up by around $2000/tonne - or $.90/lb . Market started out in the green from the get -go this morning, but in the last hour of trading, has taken a huge bounce. A sudden movement like this is usually a reaction to some sort of big news, but we are unable to find anything of importance. According to the Bloomberg article "...said Michael Jansen, a metals strategist at JPMorgan Securities Ltd. in London. `It's still a story of investors' sentiment,'' Jansen said today by phone. ``For the most part of this month, metals prices have had little to do with underlying fundamentals.'' (Bloomberg- more)

  Copyright/courtesy Dow Jones Newswire - "Nickel's price correction is nearly over with stainless steel producers returning after a seasonal period of destocking and demand growth for the metal set to firm, says Morgan Stanley. Delays and cost overruns at new projects are also price supportive, the bank notes, while supplies of nickel concentrate remain tight. Sees a recovery in demand for nickel in 4Q with substitution away from the metal "likely complete and possibly overdone."..."LME nickel prices should stabilize at or above current levels as stainless steel producers return to market after seasonal de-stocking period, says Morgan Stanley; 3-month nickel last at $28,475/ton, +$175 on London kerb. Morgan Stanley says prices near current levels likely below marginal cost of production, which has forced some higher-cost nickel pig iron producers in China to reduce output. But lower nickel prices should stimulate demand from stainless steel producers. "We believe the combination of lower nickel prices, dwindling stainless steel inventories and steady final demand is likely to lead to a recovery in nickel demand" by 4Q."

  CVRD puts Brazilian pig iron makers on notice - "Companhia Vale do Rio Doce, reaffirming its commitment to the sustainable development of the regions where it is present and to the compliance with environmental and labor legislation by its clients, announced the followings..." - more here

  Chinese coke exports in July sunk due to strong domestic demand - "It is reported that China’s coke export volume shrank further in July 2007." - more here

  International Stainless Steel Forum introduces new leaflet on "Why use stainless steel reinforcing bar?" - here

  Stainless and Heat Resisting Steel Crude Steel Production (Ingot/Slab Equivalent) -  Statistics here

  Eramet releases 1st half 2007 results - (excerpt) "Furthermore, global nickel production should increase in 2007 compared with 2006 due to growth in Chinese nickel pig iron production. In this context, nickel prices should continue to be extremely volatile." - more here

  China now Australia's no.1 trade partner - "Mainland China is now Australia's number one trading partner, overtaking Japan's top position for the past 36 years." - more here

  Today's beginning nickel inventory - plus 840 tons = 24,126 tonnes (4.50% - 1086 tonnes cancelled warrants/ 23,040 net stock level) Shanghai Jinchuan nickel closed at 250000-251000 RMB/t, plus 2,000.

While US and Canadian markets will be closed Monday, LME will be open for business, so we will have a report that date. We will also pay tribute Monday, to a special day held "down-under", when we will feature what sets atop the largest free-standing stainless steel structure in the southern hemisphere. To our visitors on the other side of the planet, we wish you a safe and restful weekend! If you need to get away, but can't find your passport, you can now take virtual vacations here To the rest of our readers, we hope to see you tomorrow.    

  (submitted by a reader) High phosphorus stainless - "In Russia, China-based stainless steel has been detected with extra high contents of phosphorous, probably due to the use of nickel pig iron in the production phase in Chinese plants. This incident has alerted the Russia Stainless Association and Russia has put Chinese stainless mills on notice warning them not to certify stainless steel made of nickel pig iron and that only standard stainless steel produced with standard refined nickel can be certified accordingly." - source Stainless Steel World here

  TD Bank Weekly Commodity Price Report - pdf here

  Copyright/courtesy Antaike - "According to statistics of non-ferrous metals, in July 2007 the National nickel concentrate output (nickel content) 5,081 tons, a decrease of 795 tons of 1-July cumulative production 38,987 tons, a decrease of 3.8%."

Nickel Producers Share of World Market
from June 2007 report here (thanks Monty)

  Update - Stainless Steel Producers Slash Output as Price Collapse Sets In - "Global stainless steel output is expected to reach 29 million tonnes this year - an increase of 2.2 percent on the figure in 2006. This may seem a reasonable outcome but all is not well in the market. In fact, if we exclude China, steel manufacturing in the rest of the world is forecast to decline by 5.3 percent." - more here

  (info from China about about one of our site sponsors) Adanac taps molybdenum mania with Ruby Creek mine - "Canadian small-cap miner Adanac Molybdenum is on the verge of cashing in a decision to snap up a neglected chunk of northern British Columbia that is now rich with promise, thanks to booming commodity prices." - more here

  Indications  at 7:50 am CST show 3 month nickel selling up by $.18/lb. Busy news day, typical for a Thursday. French Eramet reports sales numbers were up in second quarter, shipments in third are falling due to slower than expected demand, and until worldwide stainless steel de-stocking is completed, nickel prices will remain volatile. More stainless mills announced production cut-back's, Shanghai nickel falls for a third day, and Yusco in Taiwan announced it will raise the price of export stainless steel next month?. How would you like to be a Yusco sale rep and try to explain that?! Trading  price is up this morning, encouraged by LME inventories falling overnight, and still enthusiastic about China announcing plans to shut down smaller furnaces from making pig-nickel.  (Bloomberg - more)

  Industrial metal prices expected to fall further - "Domestic metal traders expect prices of industrial metals like copper, zinc, aluminium and nickel to go down further, but are still wary of trading as prices continue to be volatile." - more here

  Nickel Volatile As Stainless Cos Continue Drawdowns - Eramet - "Global nickel prices are expected to continue to be "extremely volatile" amid an ongoing drawdown in inventories by the stainless steel market, French metals and mining group Eramet SA said Thursday." - more here

  Asian steelmakers to cut steel output next month - "Asia’s third-largest steelmaker Posco of Korea said it will be reducing output of stainless steel by 25,000 tons in September due to declining orders." - more here

  Behre Dolbear Global Mining News - pdf here

  Steel Founders' Society of America Steel Market news - July recap here pdf

  Eramet: Nickel Delivery Expectations Cut As Demand Drops - "Nickel deliveries from French metals and mining group Eramet SA will fall short of the 55,000 metric tons previously estimated due to a sharp drop in metal demand, it said Thursday." - more here

  Eramet 1st-Half Net More Than Doubles on Nickel Gains - "Eramet SA, operator of the world's largest ferronickel plant, said first-half profit more than doubled after nickel prices climbed to a record." - article here

  China's Baosteel says to produce more low-nickel steel - "Baoshan Iron and Steel Co , China's second-largest stainless steel producer, said on Thursday that it would produce more low-nickel stainless steel to meet rising demand in the second half of 2007." - more here

  Price Of High Carbon Fe-Cr Starts To Be Cooled Down - "Immediately after summer vacation was over, heated spot price of high carbon ferro-chrome ( charge chrome ) has started to cool down. Since stainless steel mills in China have been decreasing their production, spot cargoes of high carbon ferro-chrome, having become an excess in China and lost the market for sales, are being offered at a discounted price of 95 US-Cents per lb. CIF." - more here

  Yusco lifts stainless prices for September - "Taiwan's largest stainless producer, Yieh United Steel Corp. (Yusco) is adding its export price for September." - more here

  Baosteel H1 net profit jumps up by 80% YoY - (excerpt) "Baosteel said that its stainless steel operation would face a big challenge in the second half because of large price fluctuations for the material." - more here

  China iron ore import figures for January to July 2007 - "World’s biggest importer of iron ore, China has imported 221.504 million tonnes of iron ore during January to July 2007. Its imports during July amounted to 33.605 million tonnes." - more here

  Nisshin Steel to cut SS output by 40% in August and September - "It is reported that Japan’s Nisshin Steel has reduced the nickel series stainless output by 40% for steel making and by 30% for cold rolling at Shunan works in August and September as compared with July 2007." - more here

  Stainless steel consumption rose 12% in H1 - industry body - "The Southern African stainless steel industry grew by 12% in the first six months of this year to a total apparent consumption of 111 025 t, the Southern Africa Stainless Steel Development Association (Sassda) said." - more here

  Copyright/courtesy Dow Jones - (excerpt) "Anglo American, based in London, UK, is conducting earth works at its ferronickel project in Barro Alto, Goias state, Brazil, due to complete in early 2008. The plant is expected to open in 1Q 2010 and will operate in full capacity in the same year."

  Sally Malay rides high on nickel - "Strong nickel prices and a big increase in production volumes have enabled nickel miner Sally Malay Mining Ltd to record a 453 per cent increase in net profit after tax to $88.1 million for the year to June 2007." - more here

  Interesting Video from U.S. Steel on "How Steel is Made - from Start to Finish" - 6 min video here And anyone interested in where aluminum comes from? Alcoa presents "It All Starts With Dirt" - video here  More "How Things Are Made" video's here

  Today's beginning nickel inventory - minus 150 tons = 23,286 tonnes (3.76% - 876 tonnes cancelled warrants/ 22,410 net stock level) Shanghai Jinchuan nickel closed at 248000-249000 RMB/t, minus 2,500.

Supply will probably never prove to be a problem, but recent news shared by our contact in Indonesia, Rohan, tends to make us believe Indonesia may be looking to clamp down on ore shipments from that country. This wouldn't be completely surprising, and we have seen similar action taken against chromite ore shipments from South Africa to China. Miners with smelters aren't really fond of those who sell raw ore direct at cut rate prices, and have been known to put pressure on governments. In two of the three major sources of pig nickel to China, Indonesia and New Caledonia, there are established nickel smelters, with more on the way. Their voice with the Philippine government, the largest Chinese source, could carry far less weight.

Economic feasibility of the so-called pig nickel production, is more a subject of contention, than fact. While the general consensus from analysts and a few large nickel miners have set the profitability point somewhere around $12/lb, we have seen media reports as low as $9/lb, and as high as $15/lb. Recent demand destruction in the stainless steel market has skewed much of the the recent info about slowing pig nickel production in China, and really does not assist us in determining a good dollar amount. We continue to follow the story closely, as we still feel the mysterious pig nickel will continue to play an important role in the future. Nickel prices will be back in play tomorrow, as London returns to the trading floor. 

  Added a new permanent link to the lower right hand column - Daily Shanghai Metal Index Graph - here

  US could be heading for recession - "Former US Treasury Secretary Larry Summers warned that the United States may be heading into recession as the biggest victim to date of the sub-prime mortgage debacle was humiliatingly sold for a token sum in Germany." - more here

  Slave labor persists in Amazon charcoal works -ICC - "Around 12 percent of Brazil's Amazon charcoal works still uses slave labor despite a major crackdown since 2004, the regional industry watchdog, Citizens' Coal Institute (ICC), said." - more here

  London Metal Exchange is closed today for Summer Bank Holiday.

  Yieh reports China’s Taiyuan Iron & Steel Group (Tisco) is raising the price of its SUS304J1, 304/304L, 321 and 301 CRC and plate by RMB800/ton for September contracts. It is also reporting Japanese Nippon Steel will cut back their output by 40% in September, while announcing price cuts on their stainless steel prices by 95,000 yen/mt from last month on stainless steel plate and sheet. Dow Jones is reporting that Hyundai Steel Co., Japan's second largest steelmaker, says it will "suspend production of stainless steel at its Incheon plant from Aug. 27-31 due to a sharp decline in orders."

  Chinese steel imports short in Europe - "The prices of flat products from China to southern EU are going to be increased from September due to supply decrease from China." - more here

  In a weekly poll of Chinese metals analysts for the Shanghai Nonferrous Metals, 32 responded. Of those, 5 (15%) expect the price of nickel to rise this week, 8 (25%) feel the price will basically stay the same, and 19 (59%) expect the price to fall this week.

2006 Steel Production from European Confederation of Iron and Steel Industries (EUROFER)

  U.S. Steel to Acquire Stelco - "U.S. Steel Corp. has agreed to pay roughly $1.1 billion in cash for Canadian steelmaker Stelco Inc. in a deal to strengthen its position as a supplier of flat-rolled steel products in North America." - more here

  Coking coal prices likely to rebound in 2008 - "Bloomberg reported that Coal used by steel makers might snap a three year slump in 2008 because of a decline in exports from China." - more here

  Machine North: imminent green light - "Joined together last weekend in Toronto, the leaders of the SMSP and Xstrata-Nickel (ex-Falconbridge) examined with the magnifying glass the ultimate grinding of the project of factory of North. Response in September." - poorly translated article here

  Base metals price bounce-back anticipated and gold demand positive - "The strength of Chinese industrial metals demand, coupled with declining exports, bodes well for a bounce back in base metal prices. Lead, tin and zinc have greatest upside potential." - more here

  Shanghai Jinchuan nickel closed at 257000-258000 RMB/t, minus 1,500.

Still have not found the cancelled warrants figures for today, so it will be tomorrow morning when LME officially posts them, that we can catch up.

  TD Bank Weekly Commodity Price Report - pdf here

  (thanks to a reader in Indonesia who keeps us advised of local mining news and assists with translation) Merrill Lynch - Indonesia’s new mining law, due out by end-2007, will stipulate a ban on ore exports, according to Member of Parliament Airlangga Hartanto, who was involved in the ratification. We think ANTM’s existing contracts will be honored but renewal may not be possible. With 80% of ANTM’s ore contracts expiring in 2008, our gross profit forecast for that year is in jeopardy as 20% of it is based on ore exports."

  Sherritt, partners to invest $3.3-billion in Ambatovy - " Japanese trading company Sumitomo Corp. and three partners, including two major Canadian companies, plan to invest about $3.3-billion (U.S.) to develop a nickel project in Madagascar amid increasing worldwide demand for nonferrous metals, the company said Thursday." - more here

  New site for those interested in NAFTA steel trade figures - North American Steel Trade Committee - here

  Indications at 7:50 am CST show 3 month nickel selling up by $.02/lb , much lower than earlier. Cash nickel shows selling up by nearly $2,000/tonne today. None our numerous sources are showing cancelled warrants for nickel this morning, so we will update when we have. (Bloomberg - more)

  China's nickel ore importers suffer huge losses as prices plummet - "China's nickel ore imports skyrocketed in July this year despite shrinking demand, which as led to a significant drop in domestic prices. Domestic nickel ore importers are currently locked into long-term nickel ore purchase contracts signed earlier in the year when nickel ore prices were high, and as such are now forced to sell at a loss in the domestic market, industry analysts told Interfax today." - more here

  Nickel, Lead Push Complex Up; Equities Support - "Gains in lead and nickel are leading the London Metals Exchange base metals higher Thursday, with prices supported by rallies in the stock markets overnight, and market participants said the metals look ripe for a short-term spike." - more here

  Metal prices to decline over 12-18 months as supply increases - Fitch - "Fitch Ratings said it expects metal prices to decline with increased supply over the next 12-18 months but remain higher than long-term averages." - more here

  Funds find a haven in commodities - "Mohammed Syed, the chief executive of Axiom Funds, the world's best-performing investor in commodity hedge funds this year, says the stock market rout bolsters his view that grain, mining and oil beat equity." - more here

  Standard Bank: Weekly Commodity Research - pdf here

  China and India drive global dig - "China and India’s extraordinary appetite for raw materials is prompting the world’s mining companies to put their pith helmets back on. To meet the demand, they are not just expanding extraction, but getting back into exploration." - more here

   Chinese market situation likely to weaken iron ore price negotiation - "It is reported that iron ore concentrate prices in the North China have rocketed up over the recent month, with the past two weeks seeing rises every single day, concerted by purchase price of the steel makers. Iron ore prices in North China went straight up by CNY 135 per tonne (USD 18) on average within one month a 16.5% gain." - more here

  China, India growth to offset US woes - "Strong fundamental demand for raw materials out of China and India would eclipse any drop in US demand caused by the bad debt crisis, BHP Billiton chief executive Chip Goodyear told investors yesterday." - more here

  Sumitomo, Partners Raise Spending on Ambatovy Nickel - "Sumitomo Corp., Japan's third-biggest trading company, and its partners will spend about 32 percent more than planned to develop a nickel mine in Madagascar as prices for equipment, engineering, labor and fuel rise." - more here

  Stainless steel mills in South Korea continue to cut output - "After Posco decreased the output of 300 series stainless steel in August, the company is expected to cut production in September." - more here

  Courtesy/copyright Dow Jones - "LME nickel is in more positive territory but its still sluggish fundamentals will provide reigns for its current gains, says a London-based broker. A firmer tone to the base metals amid relative calm in the broader financial complex is adding temporary support, he notes. Adds that rising inventories and slowing demand from the stainless sector will weigh on prices going forward."

  According to Chinese media reports, ThyssenKrupp asked the European Commission to launch an anti-dumping investigation of stainless steel products against China on the 14th.

  China’s boom gives cautious miners new air of confidence - "The boom-and-bust cycle is so entrenched in the mining sector that executives have been wary of committing to new investment, despite five years of surging commodity prices." - more here

  Xstrata to double molybdenum capacity at Chilean smelter - "Xstrata Copper is studying plans to double the treatment capacity for molybdenum concentrates at its Altonorte smelter in northern Chile, executives said Wednesday." - more here

  Today's beginning nickel inventory - plus 612 tons = 21,078 tonnes (4.41% - 930 tonnes cancelled warrants/ 20,148 net stock level) Shanghai Jinchuan nickel closed at 254000-257000RMB/t, plus 9,500.

We said we would be surprised if nickel ended as high as it indicated this morning... and we are. We expected prices to hit bottom, but not to bounce so high, so fast. Either traders are betting inventories have maxed out and the market is getting interesting again, or we are witnessing a spurt of enthusiasm that will fizzle at the first hint of another large gain in inventories. For the third day in a row, the clues left by the inventory figures, hint at a potential turn around in the market. Another bullish day for nickel, which ended at $12.77/lb ($28,150/tonne), up over $2,000/tonne in as many days. (Dow Jones - more) (Reuters - more)

  (disclaimer - subject to correction - our Chinese translation stinks - the totals should be right, the growth percentiles may be attached to wrong figure) China refined nickel imports for July rose 20.2% in July (1,167 tonnes) and 36.6% for January thru July 2007 (62,527 tonnes) compared to the same period last year. Primary sources shown are Canada, Australia, Russia, and Norway. Imports of nickel ore rose 827.1% (2,277,956 tonnes) over last July, and for the year, have grown by 783.5% (9,299,963 tonnes). Primary sources are shown as the Philippines, Indonesia, and New Caledonia.   

  International Stainless Steel Forum releases 2006 figures - Foreign Trade Flow Stainless Steel Products in 2006 Exports here Foreign Trade Flow Stainless Steel Scrap in 2006 here

  Nickel Institute new articles

• Japanese Club Promotes Stainless Steel Water Pipes - "There are many advantages of using stainless steel water pipes in countries where water resources are scarce and in countries such as Japan where water leakage is a problem." - more here
• Big Plans Take Off on the Arabian Gulf - "When it is completed in 2009, the new international airport in Doha, Qatar will be the first airport designed specifically to accommodate the Airbus A380 super jumbo." - more here
• Processing Perfect Poultry - "Stainless steels enable food processors to maintain hygienic conditions in long-lived equipment" - more here

  Copyright/courtesy China Business Daily News - "Shanxi Taigang Stainless Steel Co., Ltd., a listed subsidiary of Taiyuan Iron & Steel Group, reports a 299.10% year-on-year growth in the net profits in the first half of 2007, reaching CNY 2.74 billion, or CNY 0.7924 per share. The interim report says that its operational revenue in H1 hit CNY 40.1 billion, soaring 173.75% from a year earlier, and the overall gross profit margin was 13.64%."

  Copyright/courtesy Dow Jones - "LME nickel is seen averaging $28,300/ton  ($12.84/lb) in 3Q and and $30,000/ton ($13.61/lb) in 4Q, says Standard Chartered. Notes the recent selloff has been overdone and that nickel demand will pick up as destocking by the stainless steel industry comes to an end. There is already strong evidence that nickel pig iron producers have made significant cutbacks, which will help tighten supplies, Standard Chartered adds. Sees nickel averaging $27,000/ton ($12.25/lb) in '08.

  Copyright/courtesy AFX Financial - "Nickel consumption increased by 11% to 744,000 tonnes in the first six months of 2007, compared with the same period last year, leaving the market 2,600 tonnes in deficit, said the World Bureau of Metals Statistics (WBMS). Mine production for the same period increased by 8% to 760,200 tonnes, while refined production was 11.8% higher, stemming mainly from China, Finland and Canada."

  WMC makes BHP different - "BHP Billiton's profit growth slowed in the June half-year. But it was stopped from 'going down to Rio' by the fabulous profits on nickel." - more here

  BHP Says Credit Squeeze Won't Reduce Commodity Demand (Update4) - "BHP Billiton Ltd., the world's biggest mining company, said a global credit squeeze is unlikely to derail the five-year rally in commodity prices being driven by the emerging economies of China and India." - article here

  Hagedorn declares ‘total war’ on mining - "Shocked by the overwhelming number of mining applications covering almost every square inch of this 254,000-hectare newly-created city, Mayor Edward S. Hagedorn declared today a total ban on large-scale mining in this city." - more here

  Indications at 7:50 am CST show 3 month nickel selling up by $.40/lb . We'll be surprised if this ends this high. Today's news is a mixed bag of bearish and bullish news, and traders are forcing price up too quickly.  (Bloomberg - more) (Reuters - more)

  Global Nickel Mkt In 2,600 Ton Deficit In Jan-Jun 07 - WBMS - "The global nickel market recorded a deficit of 2,600 metric tons in the first six months of 2007, with reported stocks 5,700 tons lower, the World Bureau of Metal Statistics said Wednesday." - more here part 2

  Preliminary - Nickel imports to China rose 20% YOY in July - more later

  Copyright/courtesy Dow Jones Newswire - "Chinese customs data is bearish for LME nickel, says JP Morgan's Michael Jansen. He notes imports of nickel ore are a clear record at over 2 million metric tons, "implying that nickel in the pig iron sector remained broadly healthy in July and that talk of production cuts from this alternative source of nickel for stainless steel producers may remain a story for August/September." "Triland Metals notes nickel's rally surprised many in market, since other metals mostly weakened in Tuesday's session; technically, took out 10-day moving average, needs to break resistance at $27,500 to maintain upside momentum."

  BHP News

• BHP Billiton will up 2008 nickel, copper output - "BHP BILLITON forecasts that its production of nickel, copper, iron ore and oil will show "significant volume growth" in 2008 after a year in which the leading commodity company posted record profits and production." - more here
• BHP Billiton says outlook positive despite US debt crisis - "BHP Billiton is positive about the outlook for the diversified resources company despite the current sub-prime crisis in the United States as the industrialisation and urbanisation in India and China will continue to grow demand for its products." - more here
• BHP profits as commodity demand soars - "BHP, the world's biggest miner, has reported a 19% jump in second-half earnings on surging sales of copper, iron ore and coal, and flagged future growth to strong Asian demand." - more here

  Is the fat lady still singing? - "Mining stocks have taken a severe beating during the recent equity markets sell off, falling, on average, by nearly one third from record highs, most of which were posted in the past few months." - more here

  EU Steel Prices Holding Up At Record Levels Despite Increased Imports -"Last year represented the onset of greater global competition as China became a substantial net exporter of steel." - more here

  PNG Study: Ramu Nickel Mine 'High Risk" - "An environmental impact study on Ramu nickel mine has described the project as a "high-risk operation with severe impacts on the environment and community." - more here

  Today's beginning nickel inventory - plus 12 tons = 20,466 tonnes (3.40% - 696 tonnes cancelled warrants/ 19,770 net stock level) Shanghai Jinchuan nickel closed at 245000-247000 RMB/t, plus 4,500.

Something else worth watching this week. Xstrata and SMSP meet Thursday to discuss the future of Koniambo. This is an interesting situation, from a few different perspectives. First, if Xstrata backs out, Eramet is chomping at the bit to get the mining rights to this area back. They were forced to relinquish it, by the French government, to SMSP years ago, and have been trying to get their hands on it ever since. Second, with news that Xstrata is doubling the size of their Raglan mine, it will be curious to see if they foresee future nickel demand justifying the potentially $3 billion dollar investment. Falconbridge wanted Koniambo bad... Xstrata has not sent the same signals thus far. And thirdly, the decision could send some signals to the nickel market as a whole. If they go, then obviously Xstrata is betting all the new mines coming online over the next few years, will not be enough to meet future demand requirements. If they back off, or continue to send mixed signals, it could imply that worldwide demand either doesn't justify construction of another mega-mine yet, or that Xstrata has better use for the required investment. Either way, it will be interesting to watch if any decision is announced. Speaking of new mines coming, the report below by Commonwealth Research has a nice list of nickel projects under construction.     

  South Korean firms sign Madagascar power plant deal - "A consortium of three South Korean firms said Tuesday it has entered into a US$180 million deal to build a power plant in Madagascar." - more here

  China raises interest rates 4th time in 2007 to curb inflation - "China's central bank raised the benchmark interest rates on Tuesday for the fourth time this year in an effort to prevent the economy from overheating and curb accelerating inflation." - more here

  Russian mining giant comes to Botswana - "Russia's leading mining and metallurgical company Norilsk Nickel has bought Tati Nickel Mine, the company's chief executive Mr Peter Breese has announced." - more here

  2005 Incomes, on Average, Still Below 2000 Peak - "Americans earned a smaller average income in 2005 than in 2000, the fifth consecutive year that they had to make ends meet with less money than at the peak of the last economic expansion, new government data shows." - more here

  Indications at 7:50 am CST show 3 month nickel selling up by $.05/lb .  (Bloomberg - more) (Reuters - more) (Forbes - more)

  (comment - would you believe $9/lb is now the reported break-even point for pig nickel production?)  The red soil nickel ore price falls, China contains the nickel pig iron to restore the production -  (quote from article) "So long as the nickel price maintains above 150,000 Yuan/tons (19,800 US dollars/tons), contains the nickel pig iron enterprise to be able to make money. " - poorly translated article here

  Rand Merchant Bank - Weekly Base Metal Report - pdf here

  Behre Dolbear - Global Mining News - pdf here

  Haywood Securities - Metals & Mining Weekly - pdf here

  Metal prices still strong, RBC says - "After the meltdown in metals and mining stocks this month, analysts are questioning whether the bleeding has finally stopped." - more here

  Global crude steel production in July up by 5.3% YoY - "International Iron and Steel Institute reported that the total crude steel production in July 2007 for the 67 countries is 109.9 million tonnes up by 5.3% YoY as compared to July 2006." - more here

  Copyright/courtesy Dow Jones Newswire - "Further slippage in nickel demand could "easily" see the negative aura that surrounded the base metals throughout most of last week reemerge, says JP Morgan analyst Michael Jansen. Adds fundamentals imply support on dips but chances of a recovery in prices and a retest of overhead resistance levels depends significantly on investor sentiment improving."

  Output Of Stainless Steel Products In Japan For June 2007 Had Slight Increase - "According to the steel statistics released on the 10th of August by the Ministry of Economy, Trade and Industry, the quantities of stainless steel products ( hot-rolled products ) produced at stainless steel mills of Japan in June of 2007 were as per the table attached hereto." - more here

  BHP Billiton, Rio Tinto bullish on Chinese demand for iron ore - "Officials from Anglo-Australian mining giants BHP Billiton (BHP.AU) and Rio Tinto (RIO.AU) said Monday that they see no imminent slowdown in China's rampant demand for iron ore." - more here

  Alvaro Vargas Llosa: Latin American firms becoming true global players - "Now if only the politicians could get their act together" - more here

  Today's beginning nickel inventory - plus 192 tons = 20,454 tonnes (3.99% - 816 tonnes cancelled warrants/ 19,638 net stock level) Shanghai Jinchuan nickel closed at 241000-242000 RMB/t, no change.

• US credit crunch 'unbelievable' - Swiss central bank chief - "Swiss central bank chief Jean-Pierre Roth sharply criticised the US economic system in an interview published Sunday, after the home loans crisis that caused turmoil on world financial markets." - more here
• China Central Bank Adviser: 'Optimistic' About Econ Situation - "China central bank adviser Fan Gang said Sunday he takes an "optimistic" view of the current situation in the domestic economy and expected the pace of economic growth shouldn't speed up much more going forward." - more here
• Swiss SNB Warns Not To Underestimate Market Turbulence-Report - "Swiss National Bank Vice President Philipp Hildebrand warned not to underestimate the possible consequences of current financial market turbulence on economic growth, Swiss daily Tages-Anzeiger reported Saturday." - more here
• Market turmoil 'set to continue' - "Global stock market turmoil will continue for some time, analysts have said, and may force the Federal Reserve to cut US interest rates imminently." - more here
• Markets' Week of Living Dangerously - "The Federal Reserve made a dramatic move to shore up the US economy as it was rocked by financial turbulence, but Britain's chief banker is refusing, for now, to bail out the reckless." - article here
• The Panic of 2007 - "End of the World or Muddle Through? This week I try to explain in simple terms the very complicated story of how we went from some bad mortgage loan practices in the US to the point of world credit markets freezing up." - more here

  Week In Review - (using different source than for daily updates) If you just looked at the weeks beginning nickel price of $12.09/lb and its end at $11.86/lb, you might think the week was a snoozer. But the price of nickel was a small piece of a much more complex puzzle of base metal extremes. Ask anyone that owned stock in a mining company, and they would probably tell you this is a week they would just as soon forget. Then again, those with the good fortune of selling and buying at that particular right moment, would tell you this was a nail biter, but very profitable week. On Monday, 3 month nickel opened at $12.09/lb, fell to $11.88/lb, rose to $12.47/lb, where it ended the day. On Tuesday, after LME inventories registered a decline, nickel opened at $12.45/lb, rose to $12.93/lb, fell to $12.13/lb, and ended at $12.15/lb. On Wednesday, the market opened at $12.27/lb, rose to $12.36/lb, fell to $11.77/lb, and ended at $12.04/lb. On Thursday, panic began to rear its ugly little head in world stock markets. Markets opened at $12.00/lb, rose to $12.02/lb, fell to $11.29/lb (below $25,000/tonne by $100), and ended at $11.39/lb. On Friday, Fed chairman Ben Bernanke played the white knight by surprising U.S. markets with news the Fed had cut discount rates. Nickel was already selling in the plus, and the U.S. news helped reinforce early morning optimism. Markets opened at $11.39/lb, rose to $11.95/lb, fell to $11.39/lb, and ended the week at $11.86/lb. For the week, three month nickel ended up by 2% over last weeks close, down 27.3% for the year, and 98% lower than its record high in May.   

  Scotia Capital China Update - posted on investors blog here (excerpt - "We also upgrade our call on nickel to “neutral” from “cautious,” as the recent sell-off has made a lot of high-cost unconventional supply, especially low-grade ore from the Philippines, uneconomical. ? With the above changes, we are now bullish on coking coal, iron ore, copper, zinc, aluminum, oil, and hardwood pulp sectors. We are neutral on grains, ethylene, potash, methanol, and nickel. We are cautious on steel, urea, and paper products on a relative basis from a China perspective.")

  Visa Steel, Baosteel to set up ferrochrome unit - "Kolkata-based Visa Steel Ltd, an emerging integrated special and stainless steel player, today entered into a joint venture with Baosteel Trading Co Ltd of China and a group company Visa Comtrade AG, Switzerland, for setting up a 100,000-tonnes-per-annum ferrochrome plant in Orissa." -  article here

  Quote from Credit Suisse Commodities Research Weekly - "China should start to import more base metals again toward the end of Q3, when the de-stocking cycle is likely to be completed."

  National Mining Association - Mining Week - pdf here

  Steel Buyers Forum - Monthly price survey - pdf here

  This land is mined - "Amay Bongkas has heard the stories many times before. Outsiders, some with guns and chainsaws, have been roaming their ancestral lands in the Anipahan range of southern Palawan, drilling strange-looking holes on the ground at least a square meter wide." - article here

  Behr Dolbear Global Mining News - pdf here

Here is a humorous video from Minyanville here. We hope you all have a safe and VERY relaxing weekend!

  Base metals bounce after Fed rate cut - "Industrial metals prices bounced on Friday in volatile trading after heavy losses in the previous session caused by a squeeze in credit markets." - more here

  Specialty Metals Industry Group Releases Four Month Market Data - pdf here

  LME Decline Likely Amid Investors Reallocations - "Several of the base metals are languishing at year-to-date lows and analysts said Friday a further reshuffling of asset allocations and priorities by investors could prompt extended price declines." - more here

  Interesting graph by Wall Street Journal - Global Correction here (notice how hard the mining countries have been hit)

  China bridge just rocks with no steel - "Investigators plodding through the debris of a bridge that collapsed killing 41 people in China have come up with an unexpected piece of evidence." - more here

  Norilsk invests 4.4 bln rand in Southern Africa nickel - "Russia's Norilsk Nickel will spend over 4.4 billion rands ($588.6 million) on two projects in Botswana and South Africa, it said on Friday." - more here

  Norilsk may build Activox plant to more than quadruple output at Nkomati - "World number-one nickel producer Norilsk Nickel could build a smelter/refinery, boasting its patented Activox technology,at its 50%-owned Nkomati mine in Mpumalanga, which would allow it to increase production from 5 000 t/y of the silvery metal to some 22 000 t/y in 2102, it said on Friday." - more here

  Clawing Metals in Siberia's Frozen Land - "Norilsk Nickel's company anthem praises its smelters as "the light in Russia's window," but even in summer the Arctic city sits wreathed in a gray cloud of pollution." - more here

  Total Investment in Fixed Assets Kept Increasing From January to July - "From January to July, urban investment in fixed assets hit 5,669.8 billion yuan, a rise of 26.6 percent year-on-year. Of the total, state -owned and state controlled enterprises invested 2,431.7 billion yuan, surging 16.5 percent; real estate development enterprises valued at 1,213.5 billion yuan, rose by 28.9 percent." - more here

  Value-added of Industry Kept Surging in July - "In July, the value-added of the industrial enterprises that above designated size (all state-owned enterprises and non-state-owned enterprises with an annual sales income over 5 million yuan) increased 18.0 percent year-on-year." - more here

  Courtesy Thomson Financial - "'Recent moves (in base metals) have not been driven by a change in fundamentals, with the market still generally very tight, but by a sell-off across various asset classes, which has been reflected in the very high correlation between the London Metal Exchange price index and the DJIA during the past few days,' said Michael Widmer, an analyst at Calyon, in a note."

  Update - 9:00 am CST - Base metals across the board go green after US Fed unexpectedly cuts discount rate 50 points. Is it a dose of penicillin to fight a fear virus? Or will it turn out to be just a drug induced euphoric rush? Too early to tell....but it's a shot in the arm, either way you look at it. 

  Asia's largest producer of nickel, Chinese Jinchuan Group drops factory price of Jinchuan Nickel  from 248,000 yuan/ton to 231,000 yuan / ton, down 17,000 yuan / ton.

  Indications  at  7:45 am CST show 3 month nickel selling up by $.45/lb . This was to be expected, as yesterday's collapse was more of a knee-jerk reaction to the panic sweeping thru world markets, than what we would classify movement thru normal nickel trading. Besides, the market fell thru the $25,000/tonne barrier yesterday, and it is natural for the market to recoil once a psychological barrier has been penetrated, as if to ponder if that is really the direction it wants to go. It will be curious to see which way US markets head today, after yesterday's brutally volatile day. Asian markets took another hammering overnight to end their week in the red, while European markets are showing less red this morning. Shanghai Nonferrous Metals reports Jinchuan nickel #1 fell 8000 to 242000-244000 RMB/t, a dramatic drop considering its recent trend. (Bloomberg - more)

  Base metals bounce as markets recover after losses - "Base metal prices bounced on Friday as most financial markets rebounded after heavy losses in the previous session on fears of a global economic slowdown." - more here

  Prepare For Opportunities In Commodities Sector - "As last night’s shakeout in precious metal prices highlights, commodity markets have been unable to avoid any impact from the current chaos in global markets but where there is uncertainty there is also opportunity according to Barclays Capital." - more here

  (from yesterday) LME Selloff Ongoing; Shorts To Cover Eventually - "The selloff in the base metals is continuing Thursday and is expected to be extended further in the days ahead, but brokers said the markets are now looking very short and a rebound is eventually inevitable." - more here

  Mincor's Jim Reeve dies - "West Perth-based nickel producer Mincor Resources NL's director of exploration Jim Reeve has died, the company announced today." - more here

  TD Bank Financial Group - Weekly Commodity Price report - pdf here

  ThyssenKrupp Materials acquires web retailer OnlineMetals.com - "ThyssenKrupp Materials NA, the parent company of ThyssenKrupp Services' materials services operations in the NAFTA region, is taking over US web-based retailer of metals and plastics OnlineMetals.com,  retroactively as of August 1, the company said Friday." - more here

  Japan's H1 SS output up by 15.4%YoY - "According to Japanese government data released recently, Japan's stainless steel output in January to June 2007 rose by 15.4%YoY to 1,854,749 million tonnes." - more here

  Driven by the fall of nickel price, South Korean stainless producers including Posco and BNG Steel have reduced constantly the output of 300 series stainless steel." - more here

  Independence could be ripe for a takeover - "The plunging price of nickel is causing headaches for producers of the stainless steel additive but it might just be the catalyst for AngloGold Ashanti Ltd's takeover of Independence Group Nl." - more here

  We’re still viable despite nickel price drop: BNC - "Bindura Nickel Corporation (BNC), the country’s main nickel producer, said yesterday that it was still viable despite a sharp price drop for the commodity on the international markets in the last two months." - more here

  Today's beginning nickel inventory - plus 552 tons = 20,304 tonnes (3.16% - 642 tonnes cancelled warrants/ 19,662 net stock level)

• China's domestic crude output falls in July - "China's crude oil production fell 1.7 percent in July, pushing the country closer to the 50 percent threshold of oil import dependency, according to data from the National Statistics Bureau released today." - more here
• China's base metal production up in first seven months - "China produced 1.86 million tons of refined copper in the first seven months of this year, growing 13.9 percent from the same period last year, while primary aluminum production surged 34.0 percent to 6.71 million tons, according to statistics released today by China's National Bureau of Statistics." - more here
• China's industrial output up 18 pct year-on-year in July - NBS - "China's industrial output, the total profit from state enterprises and private enterprises with annual sales revenue of more than RMB $5 million ($659,000), rose 18 percent year-on-year in July, according to data released today by the National Bureau of Statistics." - more here
• Latest forecast on steel consumption in China by 2010 from CISA - "A panel organized by China Iron & Steel Association observed and revised 2006 forecast on China's steel market consumption by 2010." - more here
• The Xinjiang Hami verifies massive nickel ores reserves only Yu Niedu the Jinchuan - "today learned from the Xinjiang Hami area administrative office office that, this area has verified the nickel ore resources reserves 90 ten thousand metals tons, only Yu Niedu the Jinchuan, occupies Chinese second." - poorly translated article here

  Concerns over Ramu miner - "Concerns have been raised over the transparency of the operations of the Ramu nickel mine in Madang province." - more here

  Jindal Stainless to build $60 million plant in Russia - "India's Jindal Stainless Ltd. is at a "preliminary stage" of a $60 million investment for construction of a steel mill in Russia's north-western Leningrad region." - more here

  South Korean stainless steel makers to cut production - "Due to the demand stagnation and price falling, South Korean Hyundai Steel and BNG Steel have decided to cut their output again." - more here

  Today's beginning nickel inventory - plus 372 tons = 19,458 tonnes (3.02% - 588 tonnes cancelled warrants/ 18,870 net stock level)

We admitted to the writer, we are probably dead wrong, and this is why we tend to shy away from forecasts. There is an outside chance nickel could rise to new record levels before these new mega mines begin to come online, and yet there is a far less chance that nickel could fall to $6/lb on oversupply. We have two big negatives affecting the overall picture right now. The plummet in nickel prices has had a cause and effect reaction, which is feeding off itself. And now, we have this whole sub-prime problem that has shifted the market's attention away from the reality of the overall economic picture.  

Watching nickel trade every day, you soon learn, that price trends up or down, seem to be based as much on feeling, as they are on facts and fundamentals. And trying to determine how London traders are feeling from day to day, is an impossible task. The bears may be jumping for joy that the market is down, and the bears may be upset that nickel isn't selling in the $20 range any longer, but the news bulletin of the day might read - "Everyone started calling this a nickel bull market at $6/lb - when did $12 to $16/lb become bearish?". Ask a stainless steel producer what he or she thinks. We said awhile back that we thought they could live with $12/lb, we didn't say they would be happy about it. Thank you to all of our readers for their letters. As we typically do when sticking our neck in the noose, we remind our readers that opinion's are like armpits. We all have a couple and there is a multi-billion dollar industry out there trying to make everyone's smell a tad bit better to their neighbors.

  PMPA Materials Impact Report - pdf here

  US Jun Nickel Imports +0.5% From May, -25.5% From Yr Ago - "U.S. nickel imports rose 0.5% in June from last month, but was down 25.5% from the previous year, the Commerce Department reported Tuesday." - more here

  DJ US Jun Nickel Exports -12.3% From May, +112.2% From Yr Ago - "U.S. nickel exports fell 12.3% in June from the previous month, but was up 112.2% from the previous year, the Commerce Department reported Tuesday." - more here

  Nickel Mine uses 400 tonnes of stainless steel - "When Australian Stainless Steel Development Association Accredited Fabricator Nepean Engineering was awarded the tender for the manufacture of the stirring mechanisms for 10 thickeners for the Goro Nickel Mine in New Caledonia, they had no idea of the enormity of the venture." - more here

  Norilsk Nickel boots H1 revenue 57% - "MMC Norilsk Nickel (RTS: GMKN) boosted sales revenue to Russian accounting standards 57% year-on-year in the first half of 2007 to 151.5 billion rubles on the back of price growth in the world metals markets, the Arctic mining and smelting giant said in its quarterly financial report." - more here

  Indications at 7:50 am CST show 3 month nickel selling up by $.45/lb .  Like manna from heaven, the first substantial setback in LME nickel inventories in months has given nickel traders an unexpected boost. While prices should remain positive today, we feel this increase in price is overdone, considering its a first time in a long time event. Let's see if this is a turn of events, or a one hit wonder, before anyone starts counting eggs.  We expect it's the latter. (Bloomberg - more)

  Reuters Metal Weekly - pdf here

  Courtesy - Interfax - Ji'en Nickel Co. Ltd., the Shanghai-listed subsidiary of Ji'lin Haorong Nonferrous Metals Group (formerly known as Jilin Nickel Group), today reported net profits of RMB 325.87 million ($42.99 million) for the first half of this year, skyrocketing 261.42 percent from the same period of last year, due to a nickel price hike.

  Copyright/courtesy Dow Jones - "LME lead and nickel seem to be "back in favor" with the investment community and are making gains while the others metals stay in the doldrums, says a London trader. Nickel benefited from a 138-metric-ton decline in LME warehouse stocks while lead stocks fell 700 tons. Notes nickel restocking could take the market by surprise as demand returns in September."

  Global reach of the China effect - "When Bros Holding recently decided to raise export prices, little did the Chinese textile company realize that it was feeding a pressing global debate: is the "China price" pumping up world inflation?" - more here

  Merafe doubles revenue as demand soars - "Ferrochrome producer Merafe Resources expects ferrochrome prices to maintain their strong levels in the near future as the industry is working flat out to meet demand from Chinese stainless steel manufacturers." - more here

  US No1 scrap price up by $13.34/ton - "On August 6, the average price for No1 scrap in Pittsburgh, Chicago, and Philadelphia was at US$254.17/ton that is US$13.34/ton higher than last week." - more here

  Asian stainless steel mills cut output and price in July and August - "Nickel prices dramatically dropped in past few weeks, with around 10,000 tons available inventories, according to the LME." - more here

  China's steel consumption to top 520 million tons by 2010, experts - "Chinese experts predicted that China is likely to consume 425~450 million tons of crude steel and 400~420 million tons of rolled steel (recycle steel not included) in 2007." - more here

  Nickel output at Anglo Group down in Q2 - "The three subsidiaries of American Anglo Group, Loma de Niquel in Venezuela, Codemin in Brazil and Anglo Platinum in South Africa, reported the output of nickel...." - more here

  Japanese stainless steel totals 300,000 tons in June - "Japan’s stainless steel output totaled 300,839 tons in June, increasing by 0.7 percent compared to it was 298,582 tons last month..." - more here

  Today's beginning nickel inventory - minus 138 tons = 19,086 tonnes (3.36% - 642 tonnes cancelled warrants/ 18,444 net stock level)

• Russia's Jan-June Nickel Exports Down 5% On Year - Report - "Russia exported in January-June 113,200 metric tons of nickel, 5% less than in the corresponding period last year, the federal customs service reports Monday." - more here
• Stalin's Arctic Mines Help Expansion - "Wearing fireproof coveralls, Ilya Dmitriyev plods past a smelter that belches smoke and gushes molten metal, the chief product of this gritty patch of Arctic tundra where the air tastes of sulfur and concrete apartment blocks crumble on the shifting permafrost." - more here
• (from August 7) Illogically, Norilsk is Weathering Storm - "Take an oil company — cut the price of oil in half and it should not be hard to guess what happens to the stock. But when it comes to nickel, the same logic does not seem to apply." - more here
• Norilsk Nickel might close plant in Kola Peninsula - "Mining and metallurgy giant Norilsk Nickel might end up closing its plant in the border town of Nikel." - more here
• Stainless tubes and pipes in Russia - "In 2007 the trend for stainless steel production volumes increase remained although production growth speed significantly slowed comparing with 2006. The demand for stainless steels continues to be on high level." - more here

  Steel companies seek overseas iron ore - "More and more domestic iron and steel enterprises are seeking overseas iron ore resources, according to Capital Iron and Steel Group chairman Zhu Jimin, chinanews.com.cn reported today." - more here

  Davao Oriental governor holds granting of mining permits - "Davao Oriental Governor Corazon Malanyaon has suspended the granting of mining permits especially to small-scale miners following the controversies hounding the industry." - more here

  Powers Fasteners Responds To CA/T Collapse Indictment - "A Suffolk County (Mass.) Grand Jury indicted Powers Fasteners, Brewster, N.Y., Aug. 8 on a single count of involuntary manslaughter for the death of 38–year–old Melina Del Valle who died July 10, 2006, when 52,000 lb of concrete ceiling panels and hardware fell from the Interstate 90 tunnel ceiling onto her car." - more here

  Today's beginning nickel inventory - plus 420 tons = 19,224 tonnes (2.90% - 558 tonnes cancelled warrants/ 18,666 net stock level)

How low will nickel fall? Well, if we knew, we would be in the business of trading the metal. If we thought we knew, we would become full time analysts and see how many would marvel at our 2 in 10 correct forecasts, as they seem to do so many others. We remain comfortable with bringing you what is actually going on, with occasional comments on what we see happening, and letting you decide what you think the market will do. We said months ago, we felt the nickel market could handle $12/lb nickel. And now that we are there, we can safely say, that as long as the market remains in a slide, it will be far more comfortable with a lesser price. We reiterate, "as long as the market remains in a slide". In our opinion, stainless steel producers are ready and willing to dive in, but they aren't going to jump into a whirlpool. The key to getting stainless steel producers to buy again is the market direction. Don't expect any producer worth its salt, to buy nickel that starts a week selling over $29,000/tonne and ends it selling over $26,000/tonne. You buy something on Monday at market price, and you don't get your hands on the material until Friday, you lost $3,000 per tonne multiplied by how ever many tonnes you bought. This would explain why so much nickel is entering the LME warehouses. As we explained earlier this week, we look at LME stocked inventory as market "surplus", that material not being shipped directly from producer to end-user. It is obvious that with less being sold to the stainless steel producers, nickel mines are shipping their extra nickel to the LME. Buying from warehouses by stainless producers also helps lessen some of that freight time loss risk, with delivery from a strategically placed LME warehouse much faster, than for example, a boat from Russia, Canada, or Australia. In the mean time, buyers of nickel will continue to wait on the sideline, until they feel the market has found some sort of stability, or at least a floor.

When the market does send some signals that it may have established a new base, we could see the market get very interesting. When this happens, it is very likely that we will see the trend in LME inventory gains stop, then start to slowly edge down, as producers test how solid the new floor really is. If it looks like it will stick, or the halt to warehouse increases actually causes the price of nickel to rise, it is possible we will see a rush of new orders and nickel inventory numbers fall faster. If this happens, we will could see the autumn of last year repeat itself, with falling inventories causing the price of nickel to rise, thus stainless producers buy even more to protect themselves from future price increases. Then again, we are talking about producers that have had their fingers burnt severely the last 3 months, and could react a lot more cautiously to rising prices than they did last fall. And there remains the great unknown - pig nickel. We have followed this closely from the start, as we always felt there was a lot more to this than those who dismissed it, and continue to dismiss it as a non-factor. Everybody has been looking to that magical dollar amount when it becomes uneconomical for Chinese factories to use this low content laterite ore. Two years ago, this grade of nickel was classified as waste material by most mines, now Chinese ports are full of it. What impact, if any, the pig nickel market will play is uncertain, but we feel comfortable saying, the mere fact it exists will keep the market price more honest in the future. And while there are still a few that feel the market could easily re-visit May's record highs by next spring, in our opinion, without some major catastrophe affecting the supply chain, we feel the days of $23.50/lb nickel are history.  If we were to take a shot at forecasting (which we don't because it holds the value of a grain of salt), we would guess that once nickel finds its footing again, it could spend the rest of the year trading somewhere in the $12/lb to $16/lb range. Where and when it will find its footing, is anyone's guess at this point? Earlier, we felt mid-August would be the turning point, but after coming off a week that saw a nearly 10% drop in the price, the next few weeks don't hold quite the appeal to us as they once did. A lot now depends, like it or not, on how the market reacts to the whole sub-prime ordeal. Stay tuned.              

  Metals keep shine, gloss off equity markets - "FINGERS crossed, but there has not been a meltdown in the metals markets to match what has happened on equity markets." - more here

  Junk debt crisis will take a while to settle down - "I HAVE a set of early Australian flora and fauna prints Banque Nationale de Paris handed out in 1981, when it stepped up its presence in this market, and a few years ago I asked an art dealer whether they were valuable. "Not very," he replied. "There's quite a few of them around." - more here

  Traders divided over metal prices - "Traders remained divided on the outlook of base metals last week. A section of the traders was of the view that copper would drive all base metals on the LME, while others doubted if the last week’s recovery might sustain for long amid the growing use of substitution. Plastic and other substitutes have been fast restricting use of metals in infrastructure and heavy engineering." - more here

  DJ Barron's Commodities Corner: Nickel's 15 Minutes Are Up - "The world's stainless-steel producers have rammed the notion that "the customer's always right" into the faces of their nickel suppliers. " - more here

  India enters perilous world of metal hedging - "Indian metal producers and consumers are flocking to commodity exchanges to hedge their exposure to volatile prices after government restrictions were relaxed." - more here  (and)  Hedging risks await metal traders - "Domestic metal producers and consumers are flocking to commodity exchanges to hedge their exposure to volatile prices after the government relaxed restrictions."  - more here

  Chinese metal imports decline in July - "Analysts at Dresdner Kleinwort say that recent data suggests that Chinese imports of base metals and related raw materials declined in July." - more here

  China's July Rolled Steel Exports Grow 66%; July Iron Ore Imports Up 36% - "China's rolled steel exports during July aggregated 5.94 million tons, up 66% from the similar period a year ago." - more here

  Anglo American CEO puts her new broom into action - "If ever evidence were required that new Anglo CEO Cynthia Carroll means business then the shock departure of Ralph Havenstein, CEO of the group’s 75% owned Anglo Platinum, is it. And writ in large letters." - more here

  Thousands of Filipinos flee homes ahead of Jolo offensive - "Thousands of people have fled their homes in Jolo as troops pursue Muslim militants blamed for killing more than 20 soldiers, officials said Saturday." - article here  (we follow because a lot of nickel, in particular,  pig-nickel shipped to China is mined in the Philippine islands)

  This land is mined - "Amay Bongkas has heard the stories many times before. Outsiders, some with guns and chainsaws, have been roaming their ancestral lands in the Anipahan range of southern Palawan, drilling strange-looking holes on the ground at least a square meter wide." - article here

  Hummers Versus Hybrids - "ear EarthTalk: I read that hybrid cars are actually less green-friendly than even Hummers, because they have two motors and very environmentally damaging batteries. Is this true? " - more here

  (comment - NGO's are spreading the word - in our opinion, Sky should let the government handle this and keep their own people far away from any action taken)  GUATEMALA: more forced evictions of indigenous peoples planned in benefit of Skye Resources - "Rights Action recently led an educational and activist delegation to Guatemala. We took our delegates to the Skye Resources nickel mining affected indigenous communities of eastern Guatemala. The Canadian Pension Plan (amongst many institutional investors) is an investor in Skye." - more here

The nickel bulls haven't had much to sing about lately, so we thought we would give you a video that is making the rounds. It's a little long, but be patient - it's worth watching. The motto? Never count out the bulls (or) And You Thought You Had a Bad Day! - video here   

  Courtesy Dow Jones Newswire - "Tycoons Vladimir Potanin and Mikhail Prokhorov seem to be moving farther away from an amicable divorce. Prokhorov, who owns a blocking stake in Norilsk Nickel, on Monday demanded the mining giant call an EGM to make changes on the board of directors. Analysts think Prokhorov wants to return to the board and may no longer want to sell his stake to Potanin (Kommersant, p. 1; Vedomosti)."

  Diggers and Dealers Mining Forum blog - Day 3 - here

  U.S. Report on Chinese Steel Industry Subsidies Called Into Question - "The China Iron and Steel Association has labelled the American Iron and Steel Institute's (AIS) report on government subsidies handed out by China to boost its steel industry as "completely groundless", according to a CISA statement released on its official website today." - more here

  Top 20 steel producers in the world according to IISI - #1 Arcelor Mittal, #2 Nippon Steel, #3 JFE, #4 POSCO, #5 Baosteel, #6 U.S. Steel, #7 Nucor, #8 Tangshan, #9 Corus Group, #10 Riva Group (followed by #11 ThyssenKrupp, #12 Evraz Holding, #13 Ansham, #14 Jiangsu Shagang Group, #15 Gerdau, #16 Wuhan, #17 Sumitomo, #18 SAIL, #19 Techint, and #20 Magnitogorsk) (source - pdf)

  Indications at 7:52 am CST show 3 month nickel selling down by $.32/lb . So much for any new floor theories, as LME has biggest receiving day this year, fueling more negative sentiment towards nickel.  (Bloomberg - more)  

  Haywood Securities - Metals & Mining Weekly - pdf here

  Australian Jubilee News

• Australia's Jubilee seeing strong demand for nickel - "Australia's Jubilee Mines N.L. said it was in talks to renew a nickel supply agreement with the Inco division of Brazil's CVRD which expires next month, but said there had been fierce competition from other potential buyers." - more here
• Jubilee to make WA announcement soon - "Nickel miner Jubilee Mines Nl says there has been fierce competition to secure the offtake from its operation in Western Australia, with a contract announcement expected within two weeks." - more here

  The Baoshan Steel Corporation denies stopped purchasing contains the nickel pig iron - "[ Peaceful and undisturbed branch on July 26 news ] recently some media reported stated, because the market slump, the Baoshan Steel Corporation stopped purchasing contains the nickel pig iron. Regarding this, the Baoshan Steel Corporation has given the denial." - poorly translated version here

  Macquarie: Diggers and Dealers 2007: Miners Remain Bullish - "The 15th annual Diggers and Dealers Conference is currently being held in Kalgoorlie, Western Australia. According to Macquarie Research Equities (MRE) analysts, who are attending the conference, recent volatility in global equity markets has done little to dampen the enthusiasm of Australia’s key mining industry representatives. Global metal majors and Australian juniors alike have lined up over the past two days to outline to conference delegates why they believe we are in the midst of what some have described as a truly generation-long commodities boom. The following summarises some of the key presentations so far." - article here

  South Korea's Posco News

• Posco Cuts Stainless-Steel Prices for a Third Time This Year - "Posco, Asia's third-biggest steelmaker, cut prices of its stainless steel products for a third time this year after the cost of nickel, a key raw material, declined." - article here
• Posco cuts hot-rolled stainless steel price by 8% in July - "South Korea's Posco ( said Wednesday it lowered the domestic price of its hot-rolled stainless steel products by 8% last month, due to falling nickel prices." - more here

  Xstrata's ambitious Mr. Davis - "Mick Davis, Xstrata plc’s 49-year-old boss, has the mark of ceaseless ambition writ large upon him." - more here

  Today's beginning nickel inventory - plus 1152 tons = 17,826 tonnes (2.83% - 504 tonnes cancelled warrants/ 17,322 net stock level)

• Merafe ramps up production to cash in on record ferrochrome demand - "With the international ferrochrome market likely to remain in a supply deficit until 2010, and prices expected to remain at record levels, local producer Merafe Resources said it planned to beef up production and have all 20 furnaces operational by the year-end." - more here
• Merafe seeks iron ore, ups ferrochrome output - "MERAFE Resources, the South African ferrochrome and coal empowerment company, is looking actively for an iron ore asset to add to its portfolio, management said on Tuesday." - more here
• Space for ferrochrome consolidation in South Africa - "South African ferrochrome supplier Merafe says the benefit of a consolidated ferrochrome industry in South Africa would be more stability in price. Ferrochrome's strong demand is led by China which already has capacity to produce 10 million tonnes of stainless steel per year." - more here

  Costs Spiral for Miners - "Are rising costs the Achilles heel of the resources and mining sector? Classic Business Day talks with mining analyst Johann Pretorius from Nedcor Securities." - interview here

  FMG predicts its iron ore production may surpass BHP's - "The iron ore explorer Fortescue Metals Group has announced an ambitious plan to raise a billion dollars so it can expand its operations to become the second biggest iron ore exporter in Australia." - more here

  Prokhorov Seeks Norilsk Reshuffle - "Billionaire Mikhail Prokhorov has demanded the re-election of the board of world's No. 1 nickel producer Norilsk Nickel in order not to lose control of the giant, Prokhorov's fund said Monday." - article here

  Excerpt from yesterday's article "Metals bull run will last" - "He (Newmont Mining vice chairman Pierre Lassonde) also forecast that copper and molybdenum would not beat their recent record highs but the outlook for nickel, platinum, gold and oil would continue to rise." (Comment - This is an interesting, if not puzzling forecast. We have not heard the few molybdenum experts out there trumpeting this prediction, and in fact, we recently came across a Platt's report (7/19/07) that said Japanese steelmakers were quietly stockpiling moly, in anticipation of a possible shortage in 2008. After the gloomy forecasts and articles of earlier this summer, something is not adding up here. We will keep our eye on this as molybdenum is widely used in 316 and more exotic stainless steel's. In relation to his comment about nickel, we are not sure he meant to imply this, but by not saying nickel would not beat its recent record high, as he did about moly and copper, he is inferring nickel might get back up to the $23.50/lb it hit in May. While we do believe there is a very good chance nickel will find its footing in the not-so-distant future, without some supply disruption of epic proportions, we see no reason to believe it will make it back to record breaking territory for years. The nickel industry has far more to worry about than the current slump in price. The bull market is in no jeopardy of ending anytime soon, but nickel has lost a measurable amount of stainless steel market share to alternative less nickel bearing stainless grades, and the mysterious pig nickel production is now available to keep future price increases in check.) 

  Xstrata Notes on Nickel - Bloomberg - "Xstrata will provide an update on its Koniambo nickel project in New Caledonia in the last quarter. The company said in March the project may begin production by the end of 2010, reaching full annual capacity of 60,000 tons by 2012." - "Nickel production rose 3.5 percent to 24,886 tons and ferronickel output expanded to 14,749 tons, from 14,367 tons a year ago." - "The Raglan nickel mine in Canada will expand by 30 percent to 1.3 million tons per year by end-2008, Davis said." - Xstrata release - "After the expansion, Raglan will be one of the largest nickel mines in the world, with output approaching 50,000 tonnes of contained nickel in concentrate per annum, together with copper and platinum group metal byproducts."

  Philippines on the brink - "The southern Philippines could be on the brink of a new wave of violence. The Moro Islamic Liberation Front (MILF) and the government are preparing in case the four-year-old ceasefire breaks down." - more here

  (not stainless related but worth sharing with those who can't seem to live without that little plastic bottle of water) The secret is out -- bottler gets its water from the Missouri River - "Following pressure from activists, Pepsico disclosed last week that its Aquafina bottled water comes from the same source as tap water." - more here

  Indications  at 7:50 am CST show nickel selling up by $.10/lb . More than likely due to Xstrata's Ian Pierce comments that he is confident the nickel market will strengthen, after the current de-stocking by the stainless steel sector. Also reports on the company's "fact-finding" mission into China about pig nickel (see below) (Bloomberg - more)

  Rand Merchant Bank - Weekly Base Metals Report - pdf here

  Copyright/courtesy Dow Jones Newswire - "Nickel prices likely to continue to slide in August as demand remains weak, but lower prices will gradually start to limit marginal production of Chinese nickel pig iron, says Morgan Stanley. Notes poor demand from mills, service centers, which continue to de-stock; though announcements of cuts to stainless steel surcharges suggest demand could recover soon, hints at further cuts in September may delay return of buyers to market. However, Chinese nickel pig iron producers being hurt by higher energy costs, which make up more than half of their costs; estimates break-even costs close to $30,000/ton, more than current LME 3-month nickel."

  Stainless Producers Cut Nickel Use On High Prices - Xstrata - "Record high nickel prices combined with limited additional metal availability have resulted in numerous stainless producers increasing production of ferritic grades and reducing nickel-bearing austenitic material output, Anglo-Swiss miner Xstrata PLC (XTA.LN) said Tuesday." - more here

  China Use Of Nickel Pig Iron Entrepreneurial; To Fall-Xstrata - "China's use of nickel pig-iron in the production of stainless steel has been "very entrepreneurial," Xstrata PLC (XTA.LN) said Tuesday, but looks set to fall as metal prices decline." - more here

  Global Commodities Demand Strong, Led By China, India-Xstrata - "Global demand for commodities remains very strong, led by China and, increasingly, India, where imports of coal, iron ore and zinc are escalating on the back of ambitious plans to invest in infrastructure and industrial growth, Xstrata PLC (XTA.LN) said Tuesday." - more here

  Xstrata First-Half Net Doubles on Falconbridge, Metal Prices - "Xstrata Plc, the largest exporter of coal to power stations, said first-half profit more than doubled after its acquisition of Canada's Falconbridge Ltd. boosted nickel and copper production and metal prices increased." - more here

  Demand for stainless in EU remains low - "Although alloy surcharge has decreased to around €3,062/ton for August deliveries in European market, buyers are still unwilling to purchase new material." - more here

  Saudi Arabia, Egypt and UAE to dominate MEA steel markets - "According to a report by the Metal Bulletin Research, Saudi Arabia, Egypt and the UAE will dominate steel demand in the Middle East region. The report said that by the year 2010, Saudi Arabia will have an added capacity expansion of 5 million tonnes followed by Egypt with nearly 2 million tonnes and the UAE with 1.5 million tonnes." - more here

  Base metals likely to slump next year: Natixis - "Base metals are likely to enter negative territory next year after a healthy 2007, according to a report published last week by Natixis Commodity Markets, a London-based research firm." - more here

  Today's beginning nickel inventory - plus 726 tons = 16,674 tonnes (2.957% - 492 tonnes cancelled warrants/ 16,182 net stock level)

The Diggers and Dealers Forum is meeting in Australia, and is usually good for some metals news. Not sure how regular the reports are, but ABC Goldfields-Esperance is broadcasting live from the forum - live radio here (just remember that noon CST in the States, is midnight there) Michelle Wiese Bockmann, editor with Mining Journal, has a report on Day 1 here. And Australian Business ran a report here. So far the reports seem to be quiet on nickel, although Metal Bulletin ran a headline "Nickel's long term outlook rosy, prices won't fall through $25,000/t". We don't subscribe so not sure who or what is behind this statement, but maybe we will have some more for you tomorrow. Teck Cominco Executive Vice President Peter Kukielski told a Reuters reporter at the conference "We love nickel, we love iron ore and we love uranium. We are actively looking in those areas". Can we expect more takeover's? Most likely. Vedanta Resources is facing a difficult situation in India, where it wants to mine bauxite from a mountain the locals worship as their God (more here). Maybe hard for westerners to understand, but if BHP discovered gold in the hills outside of Jerusalem, especially one known as Calvary, we might relate. Building mines in indigenous areas continues to be one of the most difficult scenario's a mining company will face.

  Metals Insider - Week in Review - "Nickel falls through key $30,000/t level" - report here

  Nickel Prices to Remain Close to $30,000 Per Tonne - Norilsk Nickel - "The cost of nickel could hover around $30,000 per tonne in the medium-term, Viktor Tomenko, head of Norilsk Nickel's Arctic branch, said on Thursday." - more here

  Rusina says direct nickel shipping continues - "West Perth-based nickel company Rusina Mining NL has confirmed its plans to ship laterite ores this quarter, telling the market today it remained on schedule." - more here

  Indications at 7:52 am CST show nickel selling down by $.04/lb  (Bloomberg - more) (AFX - more)

  In the weekly poll of China Shanghai NonFerrous Metals analysts, of 32 responding, 30 (93%) felt the price of nickel would fall this week, while only 2 (7%) expected it to stay the same. Non felt an increase was in store.

  Reuters Metal Weekly - pdf here

  Behre Dolbear - Global Mining News - pdf here  (now taking a week to post online so this is the 7/30 issue)

  The 15th Diggers & Dealers Forum is being held in Kalgoorlie, Australia over the next 3 days.

  Oriel starts second high-carbon ferrochrome furnace in Russia - "Oriel Resources, the London-based chrome and nickel mining and processing company, Monday announced the commissioning of its second high-carbon ferrochrome furnace in the Tikhvin smelter plant in Russia." - more here

  Courtesy Interfax - "China imported 54,170 tons of refined nickel during the first six months of this year, up 18.1 percent when compared to the same period last year, according to statistics released by the country's General Administration of Customs."

  European austenitic stainless surcharges drop again - "European alloy surcharges of austenitic flat rolled stainless steel dropped significantly for September shipment, because LME nickel price slid down a lot in June and July. " - more here

  AK Steel Announces September 2007 Surcharges for Electrical and Stainless Steels - stainless surcharge here in pdf

  Jinchuan Upgrades Nickel Price Again - "On August 1, Jinchuan Group Limited (JNMC), Asia's largest nickel manufacturer, upgraded the factory price of its nickel products from CNY 261,000 to CNY 265,000 per ton. It is the first time for Jinchuan to adjust upward its nickel price after downgrading for five times." - more here

  Norilsk Ex-CEO Prokhorov Calls EGM To Elect New Board - "The Onexim group of Russian financier Mikhail Prokhorov has asked to convene an extraordinary shareholder meeting of mining giant OAO Norilsk Nickel (GMKN.RS), Norilsk said in a statement Monday." - more here (and) Investment fund demands dismissal of Norilsk Nickel Board - more here

  Today's beginning nickel inventory - plus 810 tons = 15,948 tonnes (3.57% - 570 tonnes cancelled warrants/ 15,378 net stock level)

(In light of the tragedy in Minnesota, we are reminded of this 2001 article from CNN, published 6 months before 9/11 changed everything) Report: $1.3 trillion needed to rebuild the nation's infrastructure - "Structurally deficient bridges, unsafe dams and overcrowded and outdated school buildings are some of the problems cited in a report from an engineering group on the infrastructure of the United States, and it says it will cost $1.3 trillion to fix them." - 2001 article here

  Desjardins Group - Monthly Review of Prices of Commodities - pdf here

  Nickel Magazine June 2007 online - here 

  Eramet says New Caledonia mine accident won't affect nickel output before 2008 - "Mining company Eramet said the rupture of a concrete cylinder at its Tiebaghi nickel mine in New Caledonia earlier this week will not affect output before 2008, and the extent of the impact then is still being evaluated." - (more here)  Eramet: Accident May Affect Start-up Of Tiebaghi Nickel Plant - "French non-ferrous metals producer Eramet SA (13175.FR) said Friday a recent accident will push back the start-up of its new nickel ore enrichment plant at Tiebaghi, New Caledonia, but said current production at its ferro-nickel facility at Doniambo won't be affected." - (more here)

  News Notes

• Platts is reporting Japanese stainless steelmaker Nisshin Seiko has announced a 30% production cut in chrome and nickel stainless steel thru August and September.
• Chinese media suggests 25% increase forecast for next years iron ore price is entirely speculative, but admit they are negotiating with three major companies, Australia's Rio Tinto, Brazil's CVRD, and Australia BHP Billiton, who not only control around 75% of the world's iron ore production, but work as a team during the negotiations.  
• The Albanian nickel ore industry, which has been in a deep sleep for the last 15 years, is expected to export 350,000 tons of nickel ore this year - Chinese media.

  (comment - we debated whether to post this as the translation is so bad, but felt it was important to at least give you the opportunity to try to read. Here are more warning signs to those who are still pooh-poohing the whole pig nickel production capability in China. This article was posted last Tuesday, and explains how easy it is for producers of other types of metals to switch to producing pig nickel, when their main line product sales are flat. It also provides some troubling numbers. Good luck with the translation.) -  The nickel price soars impels the ferro-nickel iron project to start in abundance - "Since last year, the international nickel price crazy rise, London metal exchange (LME) in March nickel forward price most has reached as high as to this May to 51,350 US dollars/tons. In under the nickel price impetus, the domestic factory starts in abundance the ferro-nickel iron project, original somewhat produce the ferroalloy the enterprise and the small steel and iron also in abundance produces a different product the ferro-nickel iron." - poorly translated article here

  Updates on nickel mines under construction from recent statements/quarterly reports - Ambatovy (Madagascar) - Sherritt announces on schedule for early 2010 production / Mirabela reports Santa Rita mine project (Brazil) on schedule for second quarter 2009 / BHP reports Ravensthorpe (Australia) will begin production first quarter of 2008/ CVRD reports production at Goro (New Caledonia) may begin as early as the third quarter of 2008 / CVRD, in quarterly report, shows Onca Puma (Brazil) scheduled to be commissioned in 4th quarter of 2008.

  Indications at 7:50 am CST show 3 month nickel selling down by $.28/lb  (Bloomberg - more) (AFX - more)

  TD Bank - Weekly Commodity Price Report - pdf here

  Commodities exchange to be established in St. Petersburg - "Deputy Economic and Trade minister Kirill Androsov said that the international commodities exchange in St. Petersburg will be registered in September or October 2007." - more here

  Acesita sees short downturn in stainless steel market - Brazil - "International stainless steel markets are due to experience a short downturn that "shouldn't be prolonged" and will return to stable conditions quickly, according to Sérgio Mendes, commercial director at Brazilian specialty steelmaker Acesita." - more here

  Yes Virginia, there is a commodity super-cycle - "Sometimes when it looks, sounds and walks like a duck…then it is duck! The continuing decline in the price of some metals including nickel has many analysts clucking that this mining boom is over." - more here

  Base Metals Mkt Conditions Still Supportive -Anglo - "Anglo American PLC is "bullish on everything" it's in, Chief Executive Cynthia Carroll said Friday, and she singled out base metals and iron ore for special mention." - more here

  Stainless steel prices expected to remain firm - "Although the current price of stainless steel has weakened, it is said that the stainless steel price in Asia, including Malaysia, will keep stable and increase further." - more here

  Taiwan's stainless steel mills to slash stainless steel output - "Taiwan’s main stainless steel manufactures, including Yusco has announced to reduce the August production by 50 percent, after the reduction in July. Tang Eng said it also will cut 50 percent of production due to the furnace maintenance." - more here

  Jindal Stainless mulls plant in Russia - "Jindal Stainless is planning a foray into the Russian market by setting up a greenfield facility in the north-western Leningrad region. In the first phase, Jindal Stainless may invest up to $60 million in an integrated stainless steel facility in Leningrad." - more here

  Black week for the SLN - "The first private company of the country has accumulated for eleven months the technical and social difficulties. Yesterday, it is the highly strategic building site of the treatment unit of the ore of Tiebaghi which was the theatre of a major incident." - translated article here

  Barcap increases commodities appetite - "Investment bank Barclays Capital has sharply increased its appetite for risk-taking in the first half of 2007, with all the new risk being taken in the commodities segment, according to Barcap reports." - more here

  Market jitters fail to halt mining merger drive - "The recent volatility in the debt market has made investors more risk-averse, leaving a number of deals balanced on a knife edge because of doubts about how the transactions will be financed." - more here

  Investing in Africa the final frontier for adventurous investors - "Africa is a financial wild west that could prove very lucrative for adventurous investors looking to cash in on emerging markets - as long as that investment recognizes the dangers that exist on the continent." - more here

  Today's beginning nickel inventory - plus 330 tons = 15,138 tonnes (4.52% - 684 tonnes cancelled warrants/ 14,454 net stock level)

Nice chart published by BHP in a recent report

  Stainless Steel Prices in Turmoil after Collapse of Nickel on LME - "Western stainless steel producers of strip mill products have temporarily abandoned their traditional basis plus surcharge mechanism for selling their material. Most EU and US mills are now quoting only transaction (effective) figures. This is, principally, to disguise the discounts necessary to obtain orders after the fall in the price of nickel since early June." - more here

  Stainless Steel and Nickel Price Forecasts from MEPS - "EU Average Stainless Steel transaction prices have now entered the path to the abyss. Basis figures have been sacrificed in a month (July) which has seen most deals concluded using only the effective price. This could continue in the short term as alloy surcharges remain at the mercy of nickel price fluctuations." - more here

  China July manufacturing PMI 53.3 vs 54.5 in June - CFLP - "The purchasing manager's index (PMI) for the manufacturing sector fell to 53.3 points in July from 54.5 in June, the China Federation of Logistics and Purchasing (CFLP) said." - article here

  '4 Manhattans a year' - "This city of high-concept glass office towers and fancy apartment blocks didn't exist 25 years ago. Turn back time and the city of Shenzhen was a quiet village of a few thousand inhabitants, mostly fishermen and their families, nestled at the neck of the peninsula that extends southward to Hong Kong." - article with video

  Cutifani leaving Inco for AngloGold Ashanti - "Mark Cutifani is leaving his position as chief operating officer (COO) at CVRD Inco to become chief executive officer (CEO) of AngloGold Ashanti." - more here

  Aggressive Swiss Giant Rides Resources Boom - "When the fugitive commodities dealer Marc Rich sold his trading firm 13 years ago, it was best known for doing business with pariah nations." - article here

  Indications at 7:50 am CST show 3 month nickel selling down by $.29/lb . After taking a one day breather, inventories gained again, bringing negative sentiment back to the market. A follow-up article from New Caledonia (posted below) about the weekend fire, shows nickel production will most likely be affected, but we can find no other metals sites, or metals analysts even talking about it. If the news ever makes its way to London, we may see some trading reaction. (Bloomberg - more)  (Reuters - more)

  ScotiaBank Commodity Price Index - pdf here

  Courtesy/Copyright Dow Jones Newswire - "Nickel prices should remain within a trading range of $30,000 to $35,000 a metric ton for the time being, says Commerzbank. Adds if it drops through $30,000/ton a retreat to a low of $25,000/ton would then be likely." - "LME nickel looks unlikely to stage a return to its former highs with any upside expected to be short-lived, says Triland's Michael Khosrowpour. The exception is if a move to 35,000/ton is realized, "forcing a technical re-assessment," he notes. More likely is a period of consolidation with a break lower going forward, Khosrowpour adds."

  CVRD Q2 net soars 50% - "CVRD, the world's largest iron ore miner, on Tuesday reported record second-quarter net profits driven by high nickel prices and a nearly 10 per cent jump in iron ore contract prices." - more here

  New Bites

• China's nickel ore imports reach 7.02 mln tons in H1
• Chinese Stainless Mills Planning August Price Cuts

  The fire the Thio one takes the SLN with the throat - "The fire which destroyed the tunnel of edge of sea of the mine will have major consequences on the provisioning and the production of the SLN. Several solutions are being studied." - translated article here

  Indonesia's Int'l Nickel logs 232 pct surge in sales - "PT International Nickel Indonesia TBK (PT Inco) on Wednesday reported unaudited sales of US$859.0 million in the second quarter of 2007, a 232 per cent increase from US$258.6 million in the same quarter last year." - more here (Bloomberg - more)

  A little piece of nostalgia courtesy an old American Metal Market magazine article - August 24, 1994 - "Nickel stocks soared on the London Metal Exchange to an all-time high yesterday on the heels of large expected shipments of Russian nickel and solid Western production, sources said. LME nickel holdings were reported as 138,192 metric tons yesterday morning, up 762 tons from last Friday. The nickel spot bid also increased on the LME yesterday morning to $2.61 per pound, up 3 cents from Monday's rings." (these inventory levels came after the collapse of the Soviet Union and the market was flooded with Russian nickel) 

  Today's beginning nickel inventory - plus 432 tons = 14,412 tonnes (3.62% - 522 tonnes cancelled warrants/ 13,890 net stock level)

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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 before 1 pm CST weekdays, with some weekend updates - Disclaimer Original content and opinions copyright www.estainlesssteel.com