Risk rises for mine mega-mergers - "The global mining sector is a buzz with expectations of mega-mergers, with the likes of Alcan, Alcoa and Anglo American all said to be on the block." - article here

  US starts AD & CVD investigation on Chinese steel pipe imports - "The US Department of Commerce has initiated the antidumping and countervailing duty investigations against China for import of circular welded carbon steel pipes, a formal step that will be followed by a preliminary determination in July of whether to impose duties." - more here

  'Moly' nearing two-year high - "The mysterious metal that is molybdenum, or "moly" for short, could rise above record prices last seen in June, 2005, if reports that China may cut export quotas on moly products by roughly 50% prove correct. News is expected next week." - article here

  Today's beginning nickel inventory -  minus 156 = 8,910 tonnes (6.33% - 564 tonnes cancelled warrants/ 8,346 net stock level)

• From Scotia Capital China Update - (taken from forum - full report available to Scotia customers) "China’s nickel ore imports soared 10x YOY to record 1.64 million tonnes in May. The Philippines remained the largest supplier during the month at 960,346 tonnes, followed by Indonesia (518,320 tonnes) and New Caledonia (124,535 tonnes). China’s nickel ore imports have already reached 5.49 million tones during the first five months, exceeding the total imports of 3.78 million tonnes in all of 2006. Since the weather conditions for major suppliers are normally more favourable for shipping in the remainder of the year, we believe that China’s ore imports will continue to increase from the current level. The latest data reinforced our view that China’s ore imports will easily top 12 million tonnes, enough to produce 100,000 tonnes of nickel contained in pig iron."
• From Metal Center News June 2007 - (two blurbs) (from A Brief Calm in the Metals Hauling Storm) "For the first four months of 2007, service center steel shipments dropped by over a million tons - a 5.4% decline, from 19.24 million to 18.21 million tons, compared to the same period in 2006. A similar pattern has emerged for aluminum, copper, and other materials. In addition, the drawdown of inventory taking place at the service center level has reduced shipments from mills to distributors. Service center inventories have declined 11.3% since the start of the year, according to MSCI." (from Powerful Demand For Steel) "Wright attributes the current tightness of the structural steel market, where producers are operating at 97% of capacity or more, to this strong industrial demand, which is also fueling sales of reinforcing bar, plate, structural tubing, and stainless steel. The 100 ethanol plants currently under construction, as well as a similar building of biodiesel facilities, illustrate the enormity of demand, says Simonson. And that doesn't even take into account all the oil and gas related expansions and the rebirth of investment by the electric power industry after virtually no activity for about 5 years, he adds" - courtesy  print copy of Metal Center News

  Europe Q3 ferro-chrome deals agreed at $1/lb - sources - "Benchmark third-quarter ferro-chrome contract prices in Europe have been settled at least 18 cents up from the second quarter's level to a new record of $1 per lb, industry sources said on Wednesday." - article here

  Hexam bullish on commodities for next 10 years - "The bull market in commodities will persist for at least another 10 years, fund manager Hexam Capital Partners said on Wednesday." - more here

  Metals hit by market fears - "Metals remained under pressure on Wednesday after risk aversion led to heavy selling across the metals complex on Tuesday." - article here

  Mining heavies poised for battle - "TWO of the most intimidating miners in the industry - ousted Consolidated Minerals boss Michael Kiernan and former BHP Billiton chief executive Brian Gilbertson - are poised to go head-to-head in a $700 million battle for control of Perth's ConsMin." - article here

  Update - 9:00 AM CST Indications after AM kerb trading show 3 month nickel still selling down by $.36/lb. Your official prices today are $16.69/lb - for both cash and 3 month. Europe just agreed to a record price for ferrochrome for 3rd quarter. More later.

  Indications at 7:50 am CST show 3 month nickel selling down by $.36/lb   (Bloomberg - more) (Financial Times - more)

  Behind The Nickel Slump - "From the all time highs of around $US54,000 a tonne two months ago, nickel has undergone a significant correction, with prices down 25 per cent since early this month." - article here

  Courtesy/copyright Dow Jones Newswire - "LME nickel likely to fall more, given comments by China stainless steel mills on substitution, changes in LME spread-lending guidance to avoid market squeezes that make contract less attractive for speculative players, says ANZ analyst Andrew Harrington. Nickel has slumped more than 20% since start of June and is getting closer to "reasonable" levels; "prices in excess of 50,000 dollars a ton were never going to be durable."

  News Bite

• Analysts at Deutsche Bank have said the correction to the nickel price is a "healthy development" for a market still facing robust growth and low global supply, with prices to stay strong until 2010.
• The American Iron and Steel Institute, has reported that US imported a total of 3.21 million tons of steel in May 2007, including 2.77 million tons of finished steel up by 13% month on month and 25% month on month respectively against April 2007.
• China National Development & Reform Commission has revealed in its latest report, that domestic steel price has fallen for four weeks from May 21st 2007 and reported 4.37% reduction during this period.
• Asian stocks sank to the lowest in two weeks today, hurt by the drop in commodity prices.

  EU stainless steel export down in Q1 - "According to the Iron & Steel Statistics Bureau (ISSB), EU stainless steel flat products export figure fell by a significant 26 percent in first quarter compared to the same time in 2006." - article here

  Today's beginning nickel inventory -  plus 468 = 8,886 tonnes (6.35% - 564 tonnes cancelled warrants/ 8,322 net stock level)

• Courtesy/Copyright Dow Jones Newswire - "Chinese imports of nickel ores and concentrates hit another record high in May of 1.642 million tons, leaving China on target to produce around 100,000 tons of contained nickel this year, says Macquarie. Imports of nickel ore from the Philippines, Indonesia and New Caledonia totaled 1.603 million tons, up slightly from 1.591 million tons last in April. "For the first five months as a whole, we estimate that imports of ore from these three countries for nickel pig iron production were equivalent to 43,527 tons, up from just 2,935 tons in the same period of last year and 26,180 tons for all of 2006," Macquarie says."
• Metals Takeovers Doubled in 2006, PricewaterhouseCoopers Says - "Metal-industry mergers and acquisitions more than doubled to $77.4 billion last year as companies sought to expand to meet rising global demand for the commodities, PricewaterhouseCoopers LLP said." - more here
• ABARE predicts rise in commodities - "Continued growth in mineral and energy commodity exports will boost Australia's commodity earnings to nearly $150 billion in 2007/08, ABARE said." - more here

  China's steel product prices continue to drop - "China's steel product prices continued to fall between June 11 and June 17, due to the increased export tax on steel products, up from 5 percent to 10 percent, which came into effect June 1, the National Development and Reform Commission announced yesterday." - article here

  China's nickel, molybdenum powder, platinum exports rise in May - "China's unwrought nickel exports in May 2007 reached 1,986 mt, which is a 54% gain compared with the 1,288 mt exported in April, the latest figures from the General Administration of Customs of China showed Monday. Nickel exports to date in January-May totaled 9,870 mt." - more here

  Concerns over High Nickel Prices Send Manganese Prices Skyward - "Although manganese is the fourth most heavily consumed metal – behind iron, aluminum and copper, most investors have failed to observe the dramatic bull market in manganese which began unfolding this past spring." - more here

  New economic tigers Brazil, Russia, India and China overtake U.S. in dominating global energy industry, new study says - "The main challengers to U.S. economic power — Brazil, Russia, India and China — have overtaken the United States in dominating the global energy industry, according to a new study by Goldman Sachs." - more here

  Today's beginning nickel inventory -  minus 132 tons = 8,418 tonnes (3.99% - 336 tonnes cancelled warrants/ 8,082 net stock level)

• Australia's Abare Raises 07-08 Nickel Production Outlook 16% - "Australia's commodity forecaster Abare Monday raised its nickel production outlook by 16% to 230,000 metric tons for the fiscal year ending June 30, 2008, as two new mines are expected to come on stream. - article here

  Commodity exports 'to grow to $150bn' - "CONTINUED growth in mineral and energy commodity exports will boost Australia's commodity earnings to nearly $150 billion in 2007-08, ABARE said today." - article here  

  Jiuquan Steel's ferrochrome JV kicks off in South Africa - "International Ferro Metals Limited, a joint venture established by Jiuquan Iron and Steel Group and its South African and Australian partners, recently commenced operation of a 267,000-ton ferrochrome facility in South Africa, a Jiuquan Steel official said today." - article here

  Chinese steel makers posts huge surge in profit in January to April - "It is reported that China's 77 medium and large steel mills have recorded a combined profit of CNY 48.6 billion in January to April 2007 up by 202.2% YoY as compared to January to April 2006." - more here

  News Bite

• Interfax - China imported 27.62 million tons of iron ore concentrate in May, up 13 percent from the same period last year. Australia was China's largest single ore supplier in May, exporting 10.70 million tons, according to statistics released by the General Administration of Customs last Friday.

  Today's beginning nickel inventory -  minus 480 tons = 8,550 tonnes (4.77% - 408 tonnes cancelled warrants)

(Ok - without making any political statement, we close this week with another music video, that you might actually get to see before everyone else in the office does - here) Have a safe weekend, and we hope to see you back on Monday!!

  Metals Insider - from their daily report today - "Production figures are hard to come by but the trade figures show no slowdown in China's super-fast growth in imports of laterite ore - the raw ingredient for nickel pig iron….The three major suppliers are the Philippines, Indonesia, and New Caledonia….It will be very interesting to see whether sharply falling LME prices affect this trade. There is an argument that the structural tightness of the nickel market makes nickel pig iron still an essential part of the supply response. However, it is perceived to be ultimately price-sensitive. It's just that as a relatively new phenomenon, no-one is quit sure how far prices would have to fall before the economics of nickel pig iron are affected."

  Update - 9:30 am CST - Here are today's official prices - cash at $17.06/lb and $17.00/lb for 3 month. Indications show nickel up $.22/lb after 3rd ring.

  Indications at 7:55 am CST show nickel selling up by $.33/lb    (Bloomberg - more)  (Reuters - more) (updates if price changes significantly)

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

  Fortis Metals Asian Metals Monthly - pdf here

  Clinton, mining industry launch anti-poverty effort - "Former U.S. President Bill Clinton on Thursday announced a plan to fight poverty in the developing world in partnership with the mining industry, which often is accused of exploiting the poor and the environment." - article here

  Stainless steel makers to take knock on supply woes - "Ferrochrome contract prices are expected to jump by about 25 percent to a record peak in the third quarter on tight supplies." - article here

  Specialty Metals Industry Group Releases First Quarter Market Data - pdf here

  Credit Suisse forecast 25% hike in iron ore prices next year - "It is reported that global iron ore minors Companhia Vale do Rio Doce, Rio Tinto Group and BHP Billiton may further increase iron ore benchmark price by as much as 25% next year an upward revision for its former forecasts of 10% as China's demand for iron ore keeps growing up driving up iron ore price." - more here

  China releases figures of lead, zinc, nickel and tin exports and imports for the first five months - "The General Administration of Customs announced China's import and export figures for lead, zinc, nickel and tin today." - article here

  Mittal to control 80% of its iron ore to counter Rio - "Arcelor Mittal, the world`s biggest steelmaker, plans to produce about 80% of the iron ore it uses within the next decade to protect itself against price increases from the three companies that dominate the market." - more here

  Philippines reforms mining fiscal regime - "The Philippines Department of Environment and Natural Resources has issued a new fiscal regime for foreign owned mining projects through the Financial or Technical Assistance Agreement." - more here

  China News Bite

• "Tsingshan Holding Group, a stainless steel maker in Southern China, is planning to increase its production ability up to 700,000 tons in 2007, up around 200,000 tons from 2006, according to the company’s Chairman." (source - Yieh)
• "Amid wide-spread anticipation of further tightening measures over the weekend, Chinese stocks plunged 3.29 percent today,the largest single-day slump since June 4." (source - China Daily)
• "Global investment bank Credit Suisse recently forecasted international iron ore prices for next year to rise by 25 percent on the back of expectation that China's iron ore imports will increase 22 percent this year although Chinese steel industry officials believe that the prediction is far too optimistic, given that China's crude steel production is set to slow this year and iron ore output is on the rise." - (source - Interfax)

  Nickel, copper still left in 106-year-old mine - "Exploration drilling at the venerable Creighton nickel and copper mine near Sudbury, Ont., confirms mineralization that could extend the mine life "well into the future," CVRD Inco said yesterday." - article here

  Revisting the idea of Northern Ontario as 11th province - "The McGuinty Liberal’s policies of the past four years are destroying or severely hampering Northern Ontario’s two main industries – forestry and mining." - article here

  Today's beginning nickel inventory -  minus 18 tons = 9,030 tonnes (10.37% - 936 tonnes cancelled warrants)

Inventories gained 6 tonnes overnight, with Singapore receiving 144 tonnes, Rotterdam shipping 60 tonnes, and Gothenburg shipping another 78 tonnes. Cancelled warrants increased by 108 tonnes. The Baltic Dry Index moved up again today, gaining 4.3%. Significant, in that it had been falling for the last month, but has shown steady gains in the last week. Still a lot of talk in the media about the 20% cut in China stainless steel production for July. We've given this report just about enough space, so we leave you with one final thought on the matter. On this website, on June 22, 2006, we carried the following report - " Yieh is reporting 3 major Chinese stainless steel producers have announced production cuts of 20% during July in an effort to stabilize raw material costs." Yes, 2006! Here it is (here) and if you think that is just way too coincidental, and think we might have been tempted to add it, here is the copy of our page Google archived back in January (here). So the real story here? "In top secret meetings held over the weekend, Chinese steelmakers decided to release the same announcement they made last year, but to throw the market off, they were leaking it anonymously a week earlier."

Enough of beating a dead horse. Nickel started out in the positive today, albeit with hesitation, but by the end, showed a definite gain. Three month nickel ended the day at $16.83/lb ($37,100/tonne) (Dow Jones - more)

  Brazil CVRD: Drilling Could Raise Sudbury Nickel Reserves - "Brazilian miner Companhia Vale do Rio Doce , or CVRD, said Thursday a drilling program at the company's Creighton mine near Sudbury, Ontario could nearly double nickel reserves at the site." - article here

  Update - 11:00 am CST - Indications show nickel selling up approximately $.27/lb.

  Update - 9:35 am CST After its third ring for the day, 3 month nickel shows little change from earlier. Your official prices for the day are cash at $16.67/lb and 3 month at $16.64/lb. If you are wondering why demand for nickel seems to be drying up, a tonne of nickel bought yesterday at the LME cash price, is worth $1,950 less today. With those odds, can you blame buyers for sitting on the sidelines?

  Indications at 7:55 am CST show 3 month nickel little changed, up by about $.05/lb . However, cash nickel appears to be in trouble, and after backwardation had spread to over $2000/tonne yesterday, causing some to believe the slide may be showing signs of an end, the price of cash nickel has fallen to near contango range today.  (Bloomberg - more) Updates if major changes.

  Posco to reduce 300 series stainless steel prices - "South Korean Posco has announced to cut prices of 300 series stainless steel products by 400,000 won/ton (US$431.3), effective with 11 June shipments." - article here (worth noting - "This was the first time that the company to reduce its price since December 2005, the main reason is due to a drop in nickel prices.")

  Institute of Scrap Recycling Industries, Inc.- Market Report - pdf here

  The global outlook for metals and mining - 'The underlying dynamic of increased demand without increased production remains the primary reason for the recent sharp increase in global metal prices." - more here  PWC report we posted yesterday - pdf here

   (we really want to let this story drop but it just won't die)

• Demand woes hit nickel prices - "Nickel prices slid to a five-month low yesterday and are poised to head lower on reports that several major Chinese stainless steel producers are about to cut output." - article here
• Major Chinese SS makers to cut July production by 20% to 30% - "China's major stainless steel mills have jointly decided to reduce monthly production by between 20% and 30% in July, in order to combat falling domestic stainless steel prices, a major stainless steel company official told Interfax." - more here
• No cap on Chinese steel exports - Cisa - "A top official from the China's Iron & Steel Assn (Cisa) has denied reports in the Chinese media that the country's steel mills have pledged to restrict exports to under 10 percent of steel output." - article here
• Domestic stainless steel production plant to be 20% nickel prices diving - "Xinhua learned yesterday, the major domestic stainless steel production plant ready in July 20% of the news enabled the market to sudden change of wind direction." - poorly translated article here (quote - "Informed sources have told reporters, one is stainless steel plant under normal plan in the middle of the year so that equipment maintenance has reduced output, on the other hand, Due to the recent domestic stainless steel market downturn, and nickel prices skyrocketing costs surge. to take measures to maintain the steel market and the normal operation of enterprises.")
• China stainless steel mills plan 20-30% output cut - "Four major Chinese stainless steel mills, including the two largest, Taiyuan Iron and Steel (Taigang) and Baosteel , plan to cut production by 20 to 30 percent each in July, company sources said on Thursday. " - more here

(Comment - at last check - 3, now 4, or is that 5, Chinese stainless steel makers supposedly had agreed over the weekend to cut stainless steel production. One of the 3 denied any such agreement. As is seen above, another of the three was reportedly shutting down for scheduled maintenance anyway. We posted reports we had read in Chinese media that Chinese steel makers had agreed to shipping only 10% of their production in exports. Today that is being denied. Following this is like trying to figure out the plot of a bad soap opera)

  Pellet Plant - Outotec to supply world’s largest chromite pellet plant - "OAO TNK KAZCHROME has ordered a second chromite pellet plant from OUTOTEC of Helsinki, Finland. The new pellet plant, together with a similar one Outotec delivered to the Donskoy mine in 2005, will be the world's largest production unit for chromite pellets. The contract price with services and spare parts is nearly $57.2 million, reports the manufacturer." - more here

  Year old report but extensive (found link in PMPA report filed next) - The Effects of increasing Chinese Demand on Global Commodity Markets - pdf here (108 page report)

  Precision Machined Products Association - "Material Impacts Report - June 2007 - pdf here

  EU Steel Price Forecast - Long Products - "The MEPS EU Average Merchant Bar and Rebar prices have peaked. The rebar value increased €80 per tonne above its previous high in September 2006." - article here

  Potanin unsure whether he will join Norilsk Nickel board - "One of the two main shareholders in MMC Norilsk Nickel, Interros President Vladimir Potanin, is not sure that he will join the board of directors of Norilsk Nickel." - more here

  'Super' Stainless Steel Developed - "A new type of stainless steel alloy developed at Oak Ridge National Laboratory could allow for significantly increased operating temperatures and corresponding increases in efficiency in future energy production systems." - article here

  Commodities forecasting: It's all in your head - "Prices of commodities can rise quickly when production falls and supply is tight; conversely, they cost less when output rises and supply surges. Trying to gauge which way the trend is going makes forecasting tricky." - article here

  Canadian miners fall from world top tier - "Canadian companies are fading from the world's mining stage, a study said Wednesday, with the number of Canadian companies listed in the globe's top 40 miners shrinking to six last year from 12 in 2003." - article here and another

  Prony Energies, the power station which makes cough - "The first section of the power station installed on the site of Goro Nickel must enter in service four months. As for the factory as a whole, the future environmental impact makes cough ecological associations." - Translated article here

  Toledo to Complete BHP Nickel Supply Talks by October - "Toledo Mining Corp. said it will conclude talks with BHP Billiton Ltd., the world's largest mining company, on supplying nickel ore from its Berong project in the Philippines by the end of the third quarter." - article here

  Chinese duo dies in nasty highway accident - " TWO senior managers of a Chinese company, which is contracted to carry out construction work on Ramu nickel mine site in Madang province, were killed in a road accident along the Madang-Lae Highway on Tuesday." - more here

  (not nickel related) Indonesian Court To Summons Leading U.S. Paper Through Media - "The New York Times and one of its reporters is to be summoned to appear before an Indonesian court via public notice after it failed to appear at a defamation hearing at Jakarta Central Court brought by a mining executive against the newspaper according to the executive's lawyer quoted by AFP Tuesday." - more here

  (not nickel related) Mine takeover in sight - "THE Autonomous Bougainville Government (ABG) will not hesitate to take over any mining and exploration rights on Bougainville using its own mining powers." - more here

  (not nickel related) Hunger at closed Vatukoula gold mine in Fiji - "Families of the former employees of the closed down Vatukoula gold mine in Fiji are reported to be missing meals and going hungry." - article here and another and another and another  (NGO's are going to be all over this)

  Today's beginning nickel inventory -  plus 6 tons = 9,048 tonnes (11.67% - 1056 tonnes cancelled warrants)

The Baltic Dry Index gained yesterday, for the first time in a while. For those of you interested in tracking this barometer, we have a link in our lower right hand column. Some economists and analysts put a lot of stock in it to gauge the worldwide flow of trade, and indirectly, the demand for base metals. We make no recommendation, just offering it to our readers as another potential source of information. Put it next to a nickel price chart, though, and you will note some uncanny similarities. Nickel started out this morning, in what appeared to be recovery mode, but by afternoon, the price turned south again. For the day, trading on 3 month nickel ended at $16.51/lb ($36,400/tonne)  (Dow Jones - more)

  The six megatrends that are changing China - "Here’s an equity call: Go long where China is short, and go short where it is long" - more here

  Record cash flows fund mining consolidation - "As a surge of mergers and acquisitions mega-deals sweeps across the global mining sector, hunt or be hunted is the challenge for cash-rich companies seeking to ride the consolidation wave." - article here

  Speculation Takeover Continues For Alcan, Alcoa: BHP, Rio Tinto Front-Runners - " By this time next year, BHP Billiton Ltd. will likely own Alcoa Inc. and Rio Tinto should own Alcan Inc., an unnamed source told the Sydney Morning Herald, adding that Alcan has opened a data room so the Anglo-Australian mining giants can examine its books." - article here (comment - gotta love these unnamed sources)

  Update - 11:00 am CST - indication shows 3 month nickel down by $.42/lb.

  Update - 9:30 AM CST - From Bloomberg - "China may produce less stainless steel than expected this year after Shanxi Taigang Stainless Steel Co., the nation's biggest producer, and other mills agreed to cut supply by 20 percent from July 1, Taigang's President Chai Zhiyong said today." From Reuters - Africa "One of the interesting things is the talk from China's stainless steel mills that they may cut production by 20 percent," ANZ's Harrington said. "That is hurting nickel prices but it remains to be seen whether they can deliver on any promised cuts. This is probably more a message for Beijing that they are addressing concerns about the rapid expansion of the industry." (source) Your official prices for the day at $17.55/lb for cash and $17.28/lb for 3 month. Indications show 3 month nickel now selling down by $.20/lb.

  Indications at 7:55 am CST show 3 month nickel selling up by $.20/lb   (Bloomberg - more)  (updates if price moves abruptly)

  China Stainless Steel Output Cut Talk Weighs Nickel Sentiment - "Output cuts by three major Chinese stainless steel producers would initially have more of an effect on sentiment in the nickel market than a material impact on demand, analysts and traders said Wednesday." - article here (comment - please read the article very carefully and note the denial - the only thing we could find in China media yesterday when it broke, was that major Chinese steelmakers agreed to limit exports of steel to 10% of their production over the past weekend. Considering it cost $50,445 to buy a tonne of nickel on the 1st of this month, and $39,235 to buy the same tonne yesterday, there is reason to believe steel makers may slow down production until nickel prices settle down. There is evidence that metal service centers have slowed down purchasing stainless steel until price stability returns. It is part of a normal cycle when prices drop, and while feeding on itself, means little more than customers are being cautious, and playing it smart.)

  Weaker LME Nickel Not A Concern As Prices Still High - "Nickel prices plunging some 20% on the London Metal Exchange since the start of June have prompted calls of an end to the party for Australian nickel miners but companies producing the stainless steel ingredient needn't worry too much, analysts said Wednesday." - article here

  Commodity super-cycle still strong - "Need proof that the commodities super-cycle is still going strong? Corporate activity in the commodity market is more than proof, while the fundamentals of platinum remain solid." article here

  PriceWaterhouseCoopers - Mine - Riding the Wave - 100 page report - pdf here

  Implats withdraws from nickel project - "Impala Platinum's (Implats) withdrawal from the $2,25bn Ambatovy nickel project in Madagascar will cost about $25mn, including the costs of an environmental impact assessment and feasibility studies, Implats manager of group corporate finance Belinda Berlin said yesterday." - article here

  Posco raises surcharges for tinplate while stainless steel price unchanged - "In order to offset the increased material cost, South Korea Posco announced to lift the surcharge for tinplates (black-plate) with thickness under 3mm on 15 June. The new surcharge soared to between 21,000 wow and 61,000 wow per ton due to the cost difference by tinplate thickness." - article here

  -China moly quotas may cut exports by 30% -traders - "China's newly adopted molybdenum export quotas may cut exports of the minor metal by as much as 30 percent, aiming to keep more of the country's mineral resources in Chinese hands, trade sources said on Wednesday." - more here

  China may swallow mining major to satisfy ore appetite - "China may yet target a mining major as it scours the world for natural resources to feed booming domestic demand for raw materials to satisfy infrastructure needs." - article here

  China media

• "China exported 43 million tons of steel in 2006 at an average cost of $610 US dollars/ton. It imported 18.51 million tons in 2006 at an average cost of $1,071 US dollar/ton." (source)
• China produced 50,181 tons of refined nickel in the first 5 months of 2007, up 26.6% YOY. In May they produced 10,045, up 39.4% YOY. (source)
• China's iron ore import drops sharply in May - "China imported 27.62 million tons of iron ore in May this year, 6.64 million tons less than in April or down 17.2 percent month on month, the lowest since October 2006, according to Customs statistics." - article here
• China's coke output, price to rise in 2007 - "China's coke production capacity planned for construction in 2007-2008 has exceeded 50 million tons, nearly four times the newly increased production capacity of coke in 2006." - article here
• China Special Steel to focus on deep processing of nickel - "China Special Steel (CSS), the Hong Kong based company for bearing steel and spring steel producer, will focus its business on deep processing of nickel." - article here
• Jiangsu Xihu Special Steel starts to test new stainless steel wire rod line - "China's Jiangsu Xihu Special Steel will commission its test production for a 200,000 tpy stainless drawing quality stainless steel wire rod line in next month." - article here

  Today's beginning nickel inventory -  minus 234 tons = 9,042 tonnes (10.48% - 948 tonnes cancelled warrants)

On the fundamental side, we are seeing little evidence of a major change. However, there are some points that are interesting. In 2006, nickel inventories started the month at 18,186 tonnes and ended the month at 10,548 tonnes. During that time, the price of nickel basically stayed the same. The prior June, 2005, nickel inventories started the month at 8,064 tonnes, and ended the month at 7,248 tonnes. The price of nickel actually slid by about $.50/lb (7%) that June, from around $7.26/lb to $6.78/lb. So far this month, inventories have grown from 7,914 to 9,276 tonnes. If this continues, it would be the first June in the last three, to show an increase. So is demand falling because of the typical slow summer season, or is it because of substitution? It would be easy to blame it all on European vacation's, but isn't that an easy cop-out? June of 2005 and 2006 were also in the "typical slower summer season", but their inventories showed declines. Could it be that the threatened substitution is having a bigger effect than many thought? We feel it is very possible, and as we have stated before, nothing motivates end-users to deviate from an established pattern, than anger. Those of us in sales, know there is no better candidate for a new customer, than one who is angry with someone else. 300 series austenitic stainless answered many corrosion problems, and had so many attributes, that after years of proving itself, it has become the industry accepted 'norm', and readily available. It will be months before we start seeing any numbers to prove if substitution is having an effect, but for those who have been dismissing the threat, we feel you would be wise to give it some attention. Pig nickel production in China is obviously making an impact. Although as the price continue to fall, that addition to the supply chain itself becomes threatened. At $20/lb, it is economical to produce nickel this way. As we near the $15/lb mark, that starts coming into question. On the supply side, the LME inventories tell the story. While the vast majority of nickel is sold directly from mine to consumer, the LME warehouses give us a gauge to monitor the amount of "extra" nickel out there. However slowly, it has gained this month, and traders are drinking it in like a tea cup of water in the desert. We say desert, because in our opinion, we don't see any major lakes on the horizon. Yesterday's "extra" inventory stored in LME warehouses gave us no gain, but the Singapore warehouse shipped out 6 tonnes, thus the decline. Cancelled warrants also increased from yesterday, hitting the double digits for the first time this month. So, have the fundamentals really changed? Somewhat, but not enough to convince us we can't be right back to where we were, in a few short months.

And thus, we give credit, or blame, depending on which side of the nickel chain you sit, for the current price correction on sentiment. If you look back at the 2005 figures we gave above, you can see why there are many of those in the stainless steel industry, that feel the current inflated prices have always been more speculative trading, than based on fundamentals. Why is nickel worth so much more today than it was 2 years ago, when we had less nickel readily available? Like many correction's, this one seems to be caught in its own gravitational momentum, much like many believe, the last balloon ride in pricing was due more to the abundance of hot air, than facts. There is also still the question out there of why the LME rule change put the market in such a panic. Is the bull run over? There are things to keep in mind; that might answer that question. The 1.3 billion people in China aren't going to suddenly decide growing rice was more fun that building skyscrapers, and that being poor was more fun than earning an income and buying new things, many made from metals. Their 1.1 billion neighbors in India are just starting to warm up to the idea of mega-growth. Economies worldwide are booming, so demand in nickel, even if tempered by substitution, even if partially met by pig nickel, isn't going to do anything but increase. And as the price declines, the desire for substitution wanes, and the pig nickel source is put into question, and we crawl right back into a sinking boat. There are some major new sources of nickel coming down the pike, but not for awhile, and there are numerous problems we expect to see happen, before they can produce significantly.

What will happen tomorrow, or the next, is anyone's guess at this point, but today, nickel took a beating. 3 month nickel fell by almost $3000/tonne, ending trading at $16.99/lb ($37,450/tonne)  (Dow Jones - more)

  Nickel hits five-month low on China steel threat - "Nickel prices fell more than five percent on Tuesday as worries about falling demand intensified after news that China may cut stainless steel output, while copper prices slipped." - article here and more

  Zimbabwe’s Bindura Nickel Corporation focuses on difficult year ahead - "Bindura Nickel has reported a 10% drop in nickel sales from 5,994 tonnes to 5,374 tonnes for the period ended March 31, 2007 because of reduce nickel concentrate output from mines." - more here

  Indications at 7:50 am CST show nickel getting hit hard again, selling down $.71/lb.    Nickel is currently winding down AM kerb trading in London. We will update if we see any major price movement from this amount.   (Bloomberg - more)

  Tomorrow is third Wednesday prompt date on the London Metal Exchange

  Rand Merchant Bank Base Metals Weekly - pdf here

  China stainless steel mills mull production cut - "Stainless steel makers in China, the world's largest producer, are considering cutting production to prevent prices from weakening further, company sources said on Tuesday. " - article here

  Indonesia Aneka Finds Minor Leakage In Feni III Smelter - "PT Antam Tbk announces today it has lowered the power load of the FeNi III smelter due to a small metal leak from the furnace wall. Based on a preliminary investigation and opinion from Antam’s external consultant, the FeNi III smelter is expected to reach its normal operating load in a maximum of three weeks. The leak is different from and not related to the previous metal tap hole leak, which occurred on July 1st, 2006. The leak occurred at 9:00pm Central Indonesia Time on Saturday night, June 16th, 2007 and no one was injured. " - more here

• No Major Upturn in EU Steel Prices Expected for Third Quarter - "The EU strip market is relatively quiet ahead of the conclusion of price negotiations for third quarter business. Service centres are well stocked until September and are in no rush to settle. Traders are waiting for new offers from Chinese mills following the recent changes in export taxes. EU steelmakers appear to be controlling production in-line with demand quite well." - more here
• Nordic Steel Price Forecast - Long Products - "MEPS Nordic Average Merchant Bar and Drawing Quality Wire Rod prices peaked in Spring at record levels - based on increases in scrap costs and a shortage in supply. In recent months scrap values have fallen. This is expected to result in a gradual decrease in transaction figures for over the next few months." - more here

  Stainless steel demand may hit nickel - "An expected slowdown in the stainless steel sector in the next two months may take a toll on nickel, the main constituent in stainless steel." - article here

  First shipment of ore from Sarkiniemi delivered to Hitura Nickel Mine, Finland - "Belvedere Resources Ltd. (the "Company") is pleased to announce that the first shipment of ore from the newly opened Sarkiniemi Nickel Mine has been delivered to Hitura for processing. The shipment consists of approximately 150 tonnes of ore, which has been assayed at 1.17 %Ni and 0.52 %Cu. The ore will be blended with ore from Hitura to confirm optimum mixing parameters for an ongoing Hitura - Sarkiniemi ore blend." - more here

  Corrected copyright Dow Jones Newswire - S Korea To Lower Import Tariffs On Nickel Pdts - "South Korea's Ministry of Finance and Economy will lower import tariffs on nickel products such as ferro-nickel and nickel ingot to 1% from 3%, while the import tariff on nickel powder will be reduced to 3% from 5% in the second half of this year amid surges of international prices, the ministry said last week. ("S Korea To Lower Import Tariffs On Nickel Product Imports," published at 0411 GMT June 18, misstated the change in import tariff for nickel powder.)"

  Today's beginning nickel inventory -  minus 12 tons = 9,276 tonnes (10.09% - 936 tonnes cancelled warrants)