UBS:Nickel May Fall 23% on Weaker Demand for Stainless Steel

Resource from: CBCC Likes:2960

Aug 19,2010

Nickel may drop as much as 23 percent by the end of this year as demand weakens for stainless steel, the main source of consumption for the metal, according to UBS AG. Immediate-delivery nickel may fall as low as $16,535 a metric ton, analyst Tom Price said by phone from Sydney. Spot metal closed yesterday at $21,479 on the London Metal Exchange. Prices probably will breach February's 2010 low of $17,030 before rebounding next year, according to UBS. "The third quarter is the weakest quarter for the nickel trade," Price said. Demand will wane as "producers take some of the stainless-steel mills off line for maintenance in China, in Europe and in the U.S.," he said. Growth in world nickel usage will slow to 8.4 percent in the current quarter, down by almost half from the prior three months, Barclays Capital said Aug. 13. Demand from China, the world's biggest consumer, will stay at 377,000 tons this year after a 32 percent jump in 2009, according to Price. UBS is the most accurate forecaster so far of spot nickel's average third-quarter price among 17 banks surveyed in May. The metal has averaged $20,279 a ton, compared with the $20,282 predicted by the Zurich-based bank. The survey estimated that spot nickel would average $21,250 for the quarter.

(CBCC)

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