Nickel went green early this morning, and while it waffled a bit in afternoon trading, it maintained much of its gains. Why? Different analysts give different reasons, although the most logical is fund money came pouring in on the last day of the month. We also have our own opinion. While watching the market over the past few years, we have noticed that when it approached the big psychological dollar figures, the market tended to stall, and even recoil a little, before inevitably breaking thru. This was especially true on the climb, and the bull would act as if he was approaching a farm fence with an electric line strung along it. He knew he was in for a jolt, but eventually, he would have to suck it up, take the zap, and charge thru the fence. It is possible we are seeing the same with the bear on the slide. $30,000 per tonne is a big psychological barrier, maybe even as big as the $50,000/tonne mark was a few months back. And while stainless steel producers are on the sideline cheering the bear on, those who mine and trade nickel, really would rather this fence not get crossed. So, are we seeing a recoil today, as we did a few weeks back? We will have to wait and see, but for today, nickel ended the month of July at $14.25/lb ($31,405/tonne) (Dow Jones - more)           

  Goldman Sachs expects lower nickel prices up to $ 25 thousand - "The price of nickel could drop to $ 25 thousand per ton, as stocks of the metal to continue to grow in coming months, said agency Bloomberg, referring to Goldman Sachs analysts." - translated article here

  Norilsk raises 2007 nickel output forecast - "Russian metals giant Norilsk Nickel said on Tuesday it had increased its 2007 nickel output forecast to 295,000-300,000 tonnes from the earlier 270,000-275,000 tonnes due to acquisition of new assets." - more here

  Bre-X's Felderhof found not guilty - "John Felderhof has been found not guilty of insider trading after selling $84-million of Bre-X Minerals Ltd. shares in 1996, before the world learned there was virtually no gold at Bre-X's Busang site in Indonesia." - article here

  Quote from Eramet press release - "The physical nickel market was very robust during the first months of the year. Global austenitic stainless steel production grew by about 7% in the 1st half 2007. Nickel prices on the LME reached a new record in May 2007, rising to 23.7 USD/lb. However, a sharp correction began in June, causing nickel prices to drop back to 16.3 USD/lb at the end of the month. As previously announced, the effects of the industrial action seen in 2005 and 2006 in New Caledonia led to a reduction in metallurgical nickel production at Doniambo in the 1st half 2007. However, production is steadily returning to levels similar to those of last year: after dropping 14.3% in the 1st quarter 2007 compared with the 1st quarter 2006, it declined more slowly in the 2nd quarter (-5.7% compared with the 2nd quarter 2006), to reach 30,144 tonnes in the 1st half 2007, down 10.1% compared with the 1st half 2006." - press release here

  Indications at 7:50 am CST show 3 month nickel selling up by $.63/lb . LME inventories actually fell by 120 tonnes yesterday, and apparently the nickel bulls are grabbing on to this spark for motivation. One of the overseas metals sites states Credit Suisse is forecasting the nickel correction will conclude in the next few weeks. Considering their win/loss ration on recent forecasts, we wouldn't suggest you bet the farm on this one. (Bloomberg - more)

  ANZ Commodities Update - pdf here

  Haywood Securities - Metals & Mining Weekly - pdf here

  Reuters Metal Weekly - pdf here

  Commonwealth Bank - The Hard Line -  pdf here

  BMO Capital - The Goods - pdf here

  Copyright/courtesy Dow jones Newswire - "LME nickel prices may drop further over the next month, says UBS. Adds nickel stocks are expected to grow with the seasonal summer stainless steel output slowdown and stainless steel buyers reportedly on the sidelines. Says nickel prices could come under further pressure.Longer-dated nickel is approaching "value territory" with further downside limited, says UBS. It believes some nickel pig iron producers are scaling back production because of profitability issues. Sees $25,000/ton as a point where producers would half production."

  US steel trade group finds massive subsidies for Chinese mills - "China's steelmakers have benefited from more than $52 billion of government subsidies over the past ten years, many of which are in violation of World Trade Organization rules, a group of US steel industry representatives charged Monday." - article here  Copy of report can be downloaded from here

  Chinese steel export likely to drop in H2 – CISA - "Shanghai Securities News quoted Mr Luo Bingsheng deputy secretary of the China Iron and Steel Association as saying that China’s steel exports would reduce during the July to December 2007 period under the negative influence of Chinese government's macro control policies resulting in increased availability in Chinese domestic market breaking the balance between supply and demand at home." - article here

  South Korean stainless steel sales volume of 400 series increase substantially - "South Korea’s stainless steel sales volumes of 400 series cold rolled in June was first time to overpass 300 series." - article here

  Tisco will cut stainless steel production by 30~50% in August - "China’s main stainless steel manufacture, Taiyuan Iron & Steel Group (Tisco) will reduce the August production by 30 percent to 50 percent, after the 20 percent reduction in July." - more here

  Major Chinese steel producers see profits more than double in first half - "Seventy-seven large and medium-sized Chinese steel firms saw profits surge by 108.75 percent in the first half over the same period last year, the China Iron and Steel Association (CISA) announced on Monday." - more here

  Stainless, Nickel Consumers Drawing Dn Stockpiles-Eramet - "Stainless steel and nickel consumers are using stockpiled inventories in an attempt to limit their exposure to metal prices and benefit from more favorable prices later on, French metals and mining group Eramet SA (13175.FR) said Tuesday." - article here

  France's Eramet Sees 2007 Nickel Output At 63,000 Tons - "French metals and mining group Eramet SA (13175.FR) expects its metallurgical nickel output to reach around 63,000 metric tons in 2007, up from 2006 output of around 60,000 tons." - article here  AFX - more

  PT Aneka Tambang 1H Sales IDR6.86 Trillion, Up 226% On Year - (more here)

  Courtesy/copyright RosBusinessConsulting - "The net profit of Norilsk Nickel under Russian Accounting Standards (RAS) climbed more than 31 times to RUR77.747bn (approx. USD3.06bn) in the first six months of 2007 compared to the same period a year earlier, the Russian mining and metallurgical company's documents read. Norilsk Nickel's net profit amounted to RUR43.268bn (approx. USD1.70bn) in the second quarter of 2007 and RUR34.679bn (approx. USD1.36bn) in Q1 2006."

  Courtesy/copyright Dow Jones Newswire - "Mechel boosted net profit to US GAAP 226% year-on-year in the first quarter of 2007 to $205.014 million, the No. 5 Russian steel producer said in a statement. Sales revenue jumped 65.9% to $1.416 billion and EBITDA rose just over 160% to $355.45 million."

  Courtesy/copyright The Yomiuri Shimbun - "Nippon Steel & Sumikin Stainless Steel Corp., the nation's largest stainless steel producer, will cut output of wire rods in August and September by up to 50 percent, as orders from distributors decline. Production of the stainless steel rods would be cut by at least 40 percent, the Tokyo-based company said. Stainless steel sheet and coil inventories rose 3.2 percent to 122,136 tons at the end of June, according to the Japan Stainless Steel Coil Association."

  Accident at Jindal plant sparks workers’ agitation - "Tension prevailed in the Jindal Stainless Limited premises in Kalinga Nagar industrial complex, following a mishap at the site in which a contract labourer was critically injured today." - more here

  China Steel Association : 25% of iron ore rose also "is just speculation" - "International investment bank Credit Suisse recently released report said that next year the global iron ore supply will remain tight. iron ore prices are likely to increase by 25%. However, Luo Bingsheng, these comments are some investment institutions they represent the interests of the Group made a public opinion offensive." - translated article here

  Nickel prices soaring to promote nickel Rail project been started - "Since last year, the international price of nickel rose crazy. in May of this year the London Metal Exchange (LME) nickel futures prices in March reached the maximum 51,350 US dollars / ton. The high nickel prices, driven by domestic manufacturers have launched nickel Rail project some original ferroalloy production of iron and steel enterprises and small have also produce nickel iron." - (more on pig nickel if you can understand the translation) - translated version here

  Lithium ion battery using 3M cathode technology containing nickel, manganese and cobalt  makes batteries last longer and give off less heat. This patented technology is currently being used in lap top batteries, as well as rechargeable tools, with the company believing  hybrid electric vehicles are a future market.

  Today's beginning nickel inventory - minus 120 tons = 13,980 tonnes (3.48% - 486 tonnes cancelled warrants/ 13,494 net stock level)

Credit Suisse says to watch 3 reports this week, that usually have an effect on base metals trading sentiment. On Monday, Japan will release its Industrial Production data for June. On Wednesday, China releases its manufacturing PMI for July, and the US will release ISM manufacturing data for July. Not sure what good any of these reports can do for nickel, as it is slowly burying itself in negative sentiment. But no one ever knows what spark of positive economic news might end a price correction. We tend to think that LME trading has its eyes fixated on LME inventory figures each day, as they alone offer the best barometer for the worldwide supply/demand picture. At least that is what they were telling us when they were running the price up to $23.50/lb, just a few months back. The U.S. stock market took a step back this week, and with it, many of the mining stocks. If you read this site regularly, and are an investor, we suggest you spend some time at the Investor Village RNO board, where many base metal miner stock traders congregate. It is not nickel specific, but the forum members keep the conversations on-topic, the operators delete spam immediately, and the members keep others from getting too personal. You can find this board here.

Speculation has shifted from how high can nickel go just a few months back, to how long the correction would last, to how low will nickel fall. We still feel $12/lb is a figure that stainless steel producers can grudgingly accept. But even if we see the price fall that low, if nickel inventories continue to rise, the pressure to go lower, will remain strong. We had some regular readers give us the $13 - $14 range early on in the correction, and we are now into that range. We have yet to see anyone forecast the price to fall lower than $11.34/lb though. Considering prices started 2006 in the high $6/lb range, the price has a lot of room yet to move, but their seems to be a consensus growing, among those willing to make a prediction, that we may be approaching a possible turning point. In our opinion, the tension on the rubberband is slowly tightening, and while we felt by mid-August it might snap, there is evidence it may take a little longer. Stainless steel producers are not buying anymore than they have to. This isn't due to any top secret conspiracy to bring the price down, it is 'because' the price is coming down.

For those of you who might not be familiar with some of the why's and why not's of the market, we will attempt to furnish a very basic example. Let's use a very simplistic equation to explain a complex situation. You are a stainless steel distributor and you have in stock, 50 pieces of 304 stainless steel sheet for your customers. Each weighs 200 pounds. Stainless steel producers sell you stainless with a fixed cost per pound, and a monthly surcharge. The surcharge is determined by taking the average monthly cost of the raw materials, and seeing how far they are over the established base cost. For this explanation, let's call our base charge $1/per pound for 304 stainless steel (this is an example only to make the mathematics easier). At $1/lb, each of these sheets has a cost of $200 ($1/lb X 200 lbs). But we need to add the surcharge. Let's use some real surcharges for this demonstration. Let's say you bought 50 of the sheets back in May. In May, the surcharge by AK was $2.01/lb. Add the $1/lb base charge, and your cost is now $602/per sheet ($2.01 + 1.00 X 200lbs). Nickel started falling in May so you held off to buy your next 50 sheets till July, thinking your price would come down. It makes sense, right? Wrong! Back to our surcharge chart, and we see AK is charging a $2.28/lb surcharge for 304 in July. Say what? That's right, nickel has fallen by over 1/3, but the surcharge went up. Why? Because stainless steel producers use this months average metal prices, to determine a surcharge for two months later. The average price for nickel in July, will affect the surcharge for September. The surcharge for this month, was determined using the average price of the materials back in May. You remember May, when nickel hit a record high of $23.50/lb. This formula helps customers when prices are rising, but hurts when they are falling. Now if AK is charging a $2.28/lb surcharge for July, and already announced a $1.89/lb surcharge for August, and if you follow the price of nickel, you know they are going to go down further in September, when would you buy? The same 50 sheets that you paid $30,000 for in May, would cost you $32,800 in July, and will cost you $28,900 in August, and less in September. Now seriously, knowing this, if you were the distributor, and had to keep some sheets in stock to protect your customers JIT requirements, would you not hold off as long to buy as you possibly could? And remember, producers produce, not stock. You have a lead time to worry about with the factory, but your customers expects you to stock them. Conspiracy? Not hardly, it's smart business. Because if you buy wrong, and your competitor buys right, guess who can offer your customer a better price - and still make money? For the stockholders out there....if your stock was worth $20 today and you knew for a fact it was going to be worth $17 in September, would you go out and buy more today(those who trade short exempted)? Unlike those who trade in stock, the stainless steel distributor can't just dump all their inventory (shares) and open (invest in) a hamburger stand until prices find the bottom before they re-open for business(re-invest). And if you don't think the distribution market matters to producers, Outokumpu stated in this weeks quarterly report, that distributors make up 50% of their business. Much of the same principle applies to the producer. With their distribution markets slowing down overall demand, they must worry about the value of their nickel inventories. These guys don't order nickel by the pound, they order it by the tonne. If you have 20 tonnes of nickel sitting at your factory, and you bought it two weeks ago, it has already lost roughly $36,000 of its value. Maybe this will quell some of the conspiracy murmurs.

  Copyright/courtesy Dow Jones - "LME nickel prices, under "relentless pressure," could drop below $30,000 a metric ton with the next support level seen at $25,000/ton, Commerzbank says. Adds $30,000/ton is "psychologically significant."

  Manufacturing activities slowed - "Manufacturing activity in China expanded at a slower pace in June, according to a survey of purchasing managers released today." - more here

  Base Metals Bears - (excerpt from article) “They may be right, in the short term. But a year down the road, the base metals are going to be trading much higher than they are today.” - more here

  Quotes - Economic Times - India “The alloy surcharges will come off at some stage, probably like September or October and that’s simply what people are waiting for,” said analyst Michael Widmer at Calyon." “We see some pushback from customers because they do not want to absorb any more metal with a high surcharge attached,” said David Humphreys, chief economist at Russia’s Norilsk Nickel.

  National Mining Association Mining Weekly - pdf here

  Buoyant nickel price lifts debt-free Jubilee to a record profit - "West Australian nickel miner Jubilee Mines is set to announce a record annual profit late next month after producing 8633 tonnes of nickel for the 12 months to the end of June." - more here

  BRIC demand key driver for commodities - "Strong commodity demand from BRIC countries is pushing the natural resources sector forwards, according to BlackRock." - article here

 (comment - here is the article we mentioned Friday, now a respected Chinese metals paper has picked it up) Guard against low-quality iron nickel stainless steel market disruption - "As early sustained high nickel prices to low-grade laterite ore for the production of raw materials containing nickel buffeted by hot iron." - poorly translated article here (still looking for thoughts from nickel/stainless engineers)

And being as it was a rough week for many U.S. stockholders, we leave you with two interesting articles. First, in the "double take"column, the ACLU won a case against a school that tried to censor a student's right to put a religious saying in a school yearbook (here). And, "the Internal Revenue Service has lost a lawyer's challenge in front of a jury to prove a constitutional foundation for the nation's income tax." (here) Have a safe and restful weekend!

  Calling all nickel /stainless steel engineers - We are requesting input from qualified engineers, familiar with the nickel production process and its applications and effects on stainless steel. Here is what we are wondering. First, while many credit nickel with the corrosion resistance element of stainless steel, we understand it is actually a hardening/stabilizing agent in austenitic stainless. To what degree nickel assists chromium in the corrosion resistance, we aren't as clear on. Second, it is also our understanding that pig nickel ore is low grade laterite ore, and that after very expensive refinement, the nickel is basically the same as any other refined nickel. Hypothetical question - if we were to find an article in China media, about the Chinese stainless steel industry expressing concern about pig nickel ore affecting the quality and corrosion resistance of stainless steel - what exactly would they be talking about? If you have any ideas or thoughts, please contact us. You can remain anonymous, if requested. (e-mail) This is incredibly important, because the article wasn't hypothetical.  

  'The end of the bull market' - "So warns investment newsletter writer Dennis Gartman on Friday, saying the massive plunge in equities in the past 24 hours “dwarfs anything seen previously,” and is far more severe than the crash of 1987 or the emerging markets-Russian collapse of several summers ago." - more here  (ok, it's a slow news day so we get a pass)

  (posted on metals inventor forum) Domestic Demand: The Main Engine of Saudi Arabia's Growth - "Saudi Arabia's economic boom is all set to continue after four years of strong growth driven by rising oil revenues, which have stimulated massive project spending. However, domestic demand will take over as the main engine of growth for the period 2007-2010." - more here

  Update - The resistance we mentioned earlier has kicked in. Indicators show nickel is now selling up by $.10/lb. Will it hold or collapse?   

  Indications at 7:50 am CST show nickel has fallen below $14/lb and is selling down by $.12/lb . Traders don't like to fall thru these psychological barriers, so we should see some  increased resistance to falling further today. (Bloomberg - more) (AFX - more)

  TD Bank Weekly Commodity Price report - pdf here

  LME Nickel Fall From Grace To Continue On Steel Cuts - "Nickel's fall from grace as the London Metal Exchange top performer is set to continue as a result of enduring cuts at stainless steel mills in China and Europe, and speculators diverting attention elsewhere, analysts said this week." - more here

  Message to pessimists: super-cycles can last decades - "Are we five years into a commodity super-cycle that will last for decades due to China’s explosive growth or is this just a routine mining boom followed by a bust?" - article here

  Metals prices 'will stay sky-high for years' - "EUROPE'S top-ranked natural resources investor has given warning that sky-high metal prices will defy the skeptics for years to come." - more here

  Jim Rogers bullish on China stocks - (quote from article) "Rogers, in a presentation at a conference, also reiterated his suggestion to dump dollars and bonds and stay invested in commodities." - more here

  Taigang Says First-Half Profit May Have Quadrupled - "Shanxi Taigang Stainless Steel Co., China's biggest maker of the metal, said first-half profit probably quadrupled from a year earlier after buying assets from its parent, boosting output and sales." - more here

  Sumitomo Metal Mining Profit Gains 81% as Prices Gain - "Sumitomo Metal Mining Co., Japan's second-largest copper smelter and biggest nickel producer, said first-quarter profit rose 81 percent as metal prices climbed." - article here

  KRW 1 Trillion 247 Billion in Operating Profits for the 2nd Quarter - "POSCO recorded the sales of KRW 5 trillion 815 billion for the 2nd quarter of 2007, operating profits of KRW 1 trillion 247 billion and net profits of KRW 1 trillion 113 billion, attaining more than KRW 1 trillion of the operating income for 4 consecutive quarters." - more here

  Nickel price fall’s not yet a bait - "Nickel users will shrug off the sharp fall in prices and wait till the fourth quarter to step up their purchases as alloy surcharges remain high. The price of nickel, a key ingredient of stainless steel, has fallen by nearly 40% over the past two months, since hitting an all-time high of $51,800 in early May." - article here

  Comment - What a difference a few months make. A while back we posted some enquiries from China of business' looking for low grade laterite nickel ore (pig nickel ore). Now it appears the sellers far outnumber the buying enquiries. Here are just a few we found listed. Albania miner with over 1,000,000 tonnes of 1.05%. A UAB miner with access to 70 million metric tonnes, can ship 50-100,000 tonnes per month, 2% and up. Kalimanta, Indonesian miner can ship over 500,000 metric tonnes per month of 1.5% to 2.5%. Indonesia miner has 60,000 metric tonnes of 1.65%+. Another Indonesia miner can ship 50,000 tonnes per month of 1.2%. A Philippines miner can ship 50,000 tonnes a month of 1.4%-1.6%. All listed in the last 5 weeks. And on Monday we said China was paying $60-$70/tonne for .9 - 1.5% grade ore. That same grade is fetching $48 -$55/tonne today.

  Investika Releases Quarterly Report for the Period Ended - "Investika released its quarterly report for the period ended 30 June 2007. During the quarter, a total of 262,994t of laterite nickel ore at an average grade of 1.52% Ni (approximately 2,849t contained nickel on a dry basis) was shipped to China." - more here

  Toledo Mining says Berong ramp-up continues but sees equipment supply problems - "Toledo Mining Corp PLC said the ramp-up in production at the Berong nickel project to the export target of about 900,000 wet metric tons for 2007 is continuing, although the company is facing some difficulties with equipment supplies." - more here

  Today's beginning nickel inventory - plus 600 tons = 13,686 tonnes (3.51% - 480 tonnes cancelled warrants/ 13,206 net stock level)

The Los Angeles Business Journal is reporting the labor negotiations at the U.S.' largest port, may be resolved without a strike - here And for the future, UPS and the the International Brotherhood of Teamsters are in negotiations and hope to have a new contract by the end of 2007.

  Goldman Sachs Says Nickel May Fall to $25,000 a Ton - "Goldman Sachs Group Inc., the world's largest securities firm by market value, said nickel may fall to as low as $25,000 a metric ton as inventories continue to rise ``in the coming weeks." - article here

  AK Steel second-quarter profit soars - "AK Steel Holding Corp. said on Tuesday that higher steel prices and record shipments sent its second-quarter profit soaring, easily beating Wall Street estimates." - more here

  Universal Stainless 2Q Earnings Increase - "Specialty steel maker Universal Stainless & Alloy Products Inc. said Tuesday second-quarter earnings jumped 27 percent, driven primarily by strength in the aerospace market." - article here

  Acerinox H1 net 411.5 mln eur vs 101.5 mln; in line with forecasts - "Acerinox SA said it posted net profits in the six months to June 30 of 411.55 mln eur, up from 101.5 mln a year earlier, in line with forecasts between 349-422 mln as strong demand offset the impact of high raw material prices." - more here (from Friday)

  Macquarie: BHP - Strong Production Report - "This morning BHP Billiton (BHP) released a strong fourth quarter production which Macquarie Research Equities (MRE) believe will generate moderate upgrades from the market." - article here

  China imported 42,598/tonnes of refined nickel in first 6 months of 2007, 15.5% higher than similar period in 2006.

  Outokumpu webcast  - here (Points made by Juha Rantanen CEO) Believes user demand for stainless steel consumption will maintain a 5-7% annual growth. In market dynamics, distributor behaviour presently in de-stocking mode, accelerated due to nickel prices falling, which has huge impact on stainless steel production, as they make up 50% root market for stainless. End-user market remains strong. Short term of nickel prices falling will be negative to producers profits, due to losses in nickel inventory, but in long term is good for industry, as it makes nickel containing stainless steel more competitive. Significant price decrease in September and October as cheaper nickel works its way into transaction price. Will continue to cut production into 3rd quarter of standard stainless steel grades. Feels normal market will return by 4th quarter, if not sooner, based on history. Nickel inventory gains seen in second quarter results, will turn into losses in 3rd quarter.  In answers to questions, the profitability of ferritic's versus austenitic grades were similar, but ferritic prices are far more stabile. There will always be a large market for austenitic stainless, from those who require higher corrosion resistance. (in our opinion, presenters were pessimistic about 3rd quarter, but optimistic about 4th)   

  BHP hit by cost of own iron - "BHP Billiton is breaking production records but is still being squeezed by the rising price of one of its own products, iron ore." - more here

  (comments - excerpts from poorly translated article in China media) - Notes from China's stainless steel industry development forum who met July 19th in Ningbo. Majority of guest were in favor of prices falling, but its plummet has proved lethal. Without exception, all of the steel plants in attendance will be running at a loss. One guest suggested foreign steel giants were manipulating the price of nickel. China production of stainless steel has exceeded demand, and members were cautioned to learn from Japan's experience, "when the market products accumulated more than 5% of the demand, prices will drop". Stabilizing the stainless steel market was the main topic and a consensus among analysts present included the following steps - Get rid of the absolute dependence on nickel and development of new products (source)

  Indications  at 7:55 am CST show nickel selling down by $.43/lb. Last weeks mini-bull run has evaporated, with nearly all of its gains gone. Nickel stored in LME warehouses continue to grow.  Official prices posted below and nearly $1/lb less than yesterday.(Bloomberg - more)

  Worries of slackening demand put a dent in nickel - "Nickel prices fell Monday, paring the gains from last week on rising stockpiles and mounting speculation that manufacturers would reduce their use of the metal." - more here

  Behre Dolbear Global mining News - pdf here

  Commodity Price Update - pdf here

  Institute of Scrap Recycling Industries report - pdf here

  Production Activities Of Molybdenum At Mines Of Codelco / Chile In CY 2006 - "The annual report, concerning production activities in the calendar year ( January - December ) of 2006, was recently released by Codelco of Chile. According to this report, the quantities of copper and molybdenum concentrates produced by each mine of Codelco in 2006 were as per the table attached hereto." - more here

  Copyright/Courtesy Dow Jones Notes

• Chinese production of ferronickel, will add about 100,000 metric tons to overall nickel supply this year and is now the marginal source of nickel production, says Goldman Sachs. Notes that China has been aggressively importing very low grade ore from the Philippines and Indonesia to smelt in facilities originally intended to produce steel. This is high cost due to shipping and energy costs and results in a relatively poor grade of  ferronickel, which competes with scrap. "The long-term motivation price for production at the margin is now $23,000/ton," Goldman adds, up from $15,000/ton previously.
• LME nickel prices "may overshoot" to as low as $25,000 a metric ton on the downside but are seen fluctuating around $35,000/ton over the medium term, says Goldman Sachs.
• Recent sharp falls in London Metal Exchange nickel prices have forced cuts in Chinese nickel pig iron production, which should boost demand for primary nickel in the coming months, Macquarie Bank said in a report Tuesday. As a result of the 30% slump in nickel prices since the start of June, Macquarie has lowered its 2007 nickel pig iron forecast to possibly less than 85,000 metric tons, down from 95,000 tons of recoverable metal." - more here

  Jindal Stainless June qtr net up on cost cuts, high sales - "Jindal Stainless Ltd., India's largest stainless steel maker, on Monday reported a 63 percent rise in net profit for the quarter ended June on higher sales and cost-cutting measures, a senior official said." - article here

  PT Inco expects to start construction of Karebbe Dam next month - "Nickel miner PT International Nickel Indonesia (Inco) expects to start the construction of a new dam, called the Karebbe dam, on the Larona river in the Indonesian province of South Sulawesi, which will increase its hydroelectric power-generating capacity by 90 megawatts or 33 pct, company president Arif Siregar said." - more here

  BHP Copper, Nickel, Iron Output Rises to Records - "BHP Billiton Ltd., the world's biggest mining company, posted record annual production of copper, iron ore and nickel, fueling what will be its largest yearly profit." - more here

  Outokumpu News

• Finnish stainless steel maker Outokumpu quadruples 2Q profit to €565 million - more here
• Stainless Alloy Surcharge Seen Falling In August-Outokumpu - part 1 here  part 2 here

  Zimbabwe to open new nickel mine shortly - "A nickel mining company in Zimbabwe said Monday it planned to open a new mine in the central region of the country containing approximately 36.4 million tonnes of the mineral." - more here

  (comment) Based on current price of nickel, we estimate stainless steel surcharges for September will be at least $.30/lb lower for 304 and 316 stainless steel, unless the price of nickel climbs during its last 6 days of trading. 

  (comment) We have followed the metals theft stories since we began this site and have recorded some remarkable feats of theft. The stories have become so common and mundane, that we don't give the stories the coverage we used to. How could anyone top stealing an entire bridge, or a complete radar tower, as they did in Russia a few years back? And while we told you last fall to expect to hear a lot more about thieves stealing the inner workings of air conditioners (now making headlines in the mainstream media), we haven't seen this story - yet. But we are betting you will. We stumbled across an article called "Battery Toxicity" and found the following statement ..."Toyota and Honda place decals with a toll-free number on their hybrid battery packs. Toyota offers a $200 bounty to ensure that every battery comes back to the company. In a press release, Toyota states, "Every part of the battery, from the precious metals to the plastic, plates, steel case and the wiring, is recycled." - With catalytic converters the current hot item for thieves, stealing a hybrid battery would be much easier, with a much higher return on a crooks risk-of-jail investment. (article) 

  Today's beginning nickel inventory - plus 804 tons = 12,642 tonnes (4.51% - 570 tonnes cancelled warrants/ 12,072 net stock level)

For U.S. purchasing agents and buyers - "A last-minute appeal has averted a clerical workers strike at the ports of Los Angeles and Long Beach. Workers were heading out with picket-signs over the weekend, but company negotiators persuaded them back to the table. Contract talks with clerical workers at the nation's largest port complex will resume tomorrow."

  Metals Insider - Week In Review - "Battered nickel gets some respite" - more here

  Haywood Securities - Metals & Mining Weekly - pdf here

  Base metals may witness dips: Commtrendz - "Avinash Raheja, Senior Vice President, Commtrendz has a view that some dips in the base metals including nickel can be expected, as they remain on a firm uptrend in the short term." - more here

  Recycling & Recovery on the Rise in the PGM, Base Metals Sectors - "High and holding precious and base metals prices, rising operational costs - primarily due to high energy and transportation costs, long project development cycles, stricter and more uniform environmental standards, new recovery processes and long project development cycles are leading mining companies to do more recycling of waste ore and scrap equipment." - more here

  China May Further Restrain Semi-Finished Metal Product Tolling - "The Chinese government may further restrain semi-finished metal product tolling in order to control the export of high energy-consuming and resource-wasting finished products, industry officials told Interfax today." - more here

  Eramet Chief Sees No Change in Shareholding - "The chief executive of French metal and nickel mining group Eramet denied on Monday reports of a big change in the company's shareholding, saying that the business should remain anchored in France." - more here

  U.A.E.: Burj Dubai reaches a record high - "Today, the world has a new global landmark - Burj Dubai. At 512.1 metres (1,680 ft), Burj Dubai, developed by Emaar Properties, is the tallest building in the world." - more here

  The bulls among you will like this - video here

  Numbers for the crunchers or curious - There has been, and will be, a lot of talk about the importing of pig nickel ore into China and we thought we would supply some numbers to you. Here are some current market prices in China for this ore. From Indonesia, .9 to 1.1% nickel content ore, is running $60-$70/MT. This same ore was bringing $98-$105/MT five weeks ago. 1.1-1.5% nickel content ore, is bringing $90-$100/MT, compared to $153-$160/MT before. Jumping up to 2.1-2.4% nickel content ore costs producers $150-$160/MT compared to $205/$235/MT just five weeks ago. Comparable prices shown from Philippines. Ore from Indonesia shows containing 30% H2O, and from Philippines, 35% H2O. Which means even good mud will make you money these days! Also, noticed some chrome ore selling figures, showing imports from Pakistan, Indonesia, Zimbabwe, Oman, Philippines, and South Africa.  

  Sumitomo Metal Mining Co., Japan's largest nickel producer, is quoted in China media as saying Friday, it is now forecasting a 23,000 tonne surplus for the world nickel market in 2007, instead of its earlier prediction of a 12,000/tonne deficit, due to slowing demand. (www.jrj.com)

  Indications at 7:50 am CST show nickel selling down by $.36/lb . Inventories continue to gain, over 10% in last week.  In reference to the potential strike in Los Angeles, KESQ is stating the union and shipping companies have agreed to resume discussions tomorrow, but we are unable confirm this story with a second source.  (Bloomberg - more)

  Weekly Monday morning review of Chinese analysts forecasts for nickel price in upcoming week (Shanghai NonFerrous Metals) -  Last week the analysts dropped the ball, with all of them forecasting a down market, when in fact, nickel prices ended higher. This week, uncertainty returns with an apparent equal split on votes. Of 32 analysts submitting opinions, 11 (35%) felt the price would rise in the coming week, 7 (22%) feel the price will stay about the same, with the remaining 13 (41%) predicting the price will fall.  

  Chinese SS makers gather to discuss weak market price - "China Stainless Steel Industry Development Forum held at Ningbo in Zhejiang Province recently was attended by a host of large stainless makers including Tianjin Tianguan Yuantong Stainless Steel Products Company Ltd, JiangSu Daming Metal Products Company Ltd etc." - article here

  China's iron ore concentrate imports down 6.2 pct in June - "China imported 26.90 million tons of iron ore concentrate in June, down 6.2 percent from the same period last year. Australia was China's largest single iron ore supplier in June, exporting 9.64 million tons, according to statistics released by the General Administration of Customs." - article here

  BNG Steel cuts stainless steel prices - "Due to the weak demand, BNG Steel, South Korea-based steel firm reduced the stainless steel cold rolled price for 300 series by 380,000 won/ton (US$415) since July 10, 2007." - article here

  Miners going nuts over Brazil - "BRAZIL is a big player on the world mining scene and its iron ore giant CVRD is up there on the global stage with Rio Tinto and Anglo American. But, for all that, the country derives only 1 per cent of its GDP from extracting minerals." - more here

  Today's beginning nickel inventory - plus 492 tons = 11,838 tonnes (4.51% - 534 tonnes cancelled warrants/ 11,304 net stock level)

One more important thing for buyers and sellers of stainless steel. Keep your eye on what is happening in California with the port negotiations. The 15,000 members of the International Longshore Warehouse Union announced today that they would honor any picket lines  put up by the 750 members of the port's clerical workers if they are unable to reach an agreement with the port's shipping companies. Any strike would shut down the United States busiest port and would cause serious delays in imports. Very serious.  

  Missing Out On the Chinese Boom - "International media has in the past few days been dominated by the news that China's trade surplus with the rest of the world had reached a record US$26,1 billion in June." - more here

  Sudbury Basin not getting its share; Feds need to invest in mining research - "Sudbury wants to become the “Silicon Valley” of the mining sector. A major contribution from the federal government for mining research is needed to enhance the region’s globally significant cluster of mining related firms." - more here

  Indications  at 7:50 am CST show nickel presently trading up by $.25/lb . (Bloomberg - more)  (Dow Jones - more)

  TD Bank - Special Report - "Chinese Economy - The Song Remains The Same" - pdf here

  Rio Tinto denies CISA charges about cutting supplies ahead of price talks - "It is reported that Anglo Australia mining group Rio Tinto denied a charge by China Iron & Steel Association that the three global iron or majors are cutting supplies ahead of the price negotiations to achieve higher benchmark prices for next year." - article here

  Goro Nickel will owe floor before filling its mining pits - "The experts elected to study the solid rejections of Goro Nickel are leaning on another file: that of the filling of the mining pits. The process leaves at the very least perplexed specialists." - translated article here

  Imports Soar as Local Steel Makers Fail to Keep Up With Demand - "South African steel producers sold 2,8-million tons of carbon steel products in the domestic market in the past six months. The volumes were 8,6% higher than in the first six months of last year." - article here

  China's stainless steel market stepping out from the complete domination of nickel - "Since July, the steel supply has been decreasing gradually as the mills have started the practice of reducing output which is expected to have large influence towards the steel market." - more here

  BNG Steel cuts stainless steel prices - "Due to the weak demand, BNG Steel, South Korea-based steel firm reduced the stainless steel cold rolled price for 300 series by 380,000 won/ton (US$415) since July 10, 2007." - article here

  News Notes

• Not a single majority shareholder in MMC Norilsk Nickel voted for Vladimir Potanin's candidacy on the board of directors at the company's annual general meeting on June 28, according to a report on how shareholders voted at the meeting published in Rossiiskaya Gazeta.
• The London Metal Exchange has listed Incheon Port in South Korea as a good delivery point for aluminum, copper, nickel and aluminum alloy, it said Friday. (more)
• China raises benchmark interest rate by 27 basis points - Stocks rocket 3.73%, regain 4,000-point ground

  Norilsk Nickel Aims to Diversify With Help From BHP, Rio Tinto - "OAO GMK Norilsk Nickel, Russia's biggest miner, expects to expand into coal, diamonds, iron ore and molybdenum with help from BHP Billiton Ltd. and Rio Tinto Plc, two of the world's top three diversified mining companies." - article here  

  Metal Prices May Get Hit Hard By A China Slowdown -Dresdner - "Demand for base metals in China, the industry's biggest growth engine, may slow in the second half of the year and put an end to the rally in prices this year, Dresdner Kleinwort said in a recent report." - article here

  Funds Back Base Metals But Ignore Warning Signs - "The funds are back in the base metals markets with a vengeance, but this time they're playing the dangerous game of choosing to ignore the subprime tremors effecting the world's biggest economy in order to play up the positive." - article here

  Base-metal bargains may be good as gold: experts - "Nickel and zinc prices have dropped from their recent peaks, but the future for both points to strong demand and short supplies, say experts. Copper, tin and lead have potential as well." - article here

  Mining groups are emboldened by notions of a 'super-cycle' - "As the boom in commodities prices stretches into its fifth year, mining company executives are more bullish than ever." - article here

  Bullish on Metals - "I am bullish the metals complex for a number of reasons, one of which is the pressure the economy is under due to the troubles in the subprime lending sector." - article here

  Potential Strike Looms At Area Ports - "The risk of a strike that could shut down the ports of Long Beach and Los Angeles still looms, but talks between union clerical workers in the ports and the shippers whose goods they document have continued this week at a feverish pace, keeping the strike at bay." - article here (potential big problem for Asian imports into US, including stainless steel products)

  Today's beginning nickel inventory - plus 396 tons = 11,346 tonnes (4.97% - 564 tonnes cancelled warrants/ 10,782 net stock level)