It's going to be an interesting year for Nickel (& Bauxite) and will Indonesia be able to maintain the ban as internal pressures grow when people get laid off and cannot find alternative jobs. Indonesia's 11th hour turnaround on all things not Nickel or Bauxite shows the contempt for their own people nevermind their international customers.
Indonesia's stubborn stance on Bauxite and Nickel will lead to some price recoveries in the sector by those companies that didn't think Indonesia would u-turn, perhaps even some of the companies on life support can benefit from this, companies such as TALV may even be able to save themselves. I do wonder why they maintain their their key facts (TALV Website) about their mine for efficient mining, when the company surely wouldn't be in the position they are if they were efficient?
To me it looks like Indonesian companies are going to carry on mining on the basis that there is a U-turn in the ban, but for how long. How long can they afford to mine without sales funding mining costs? One thing the Nickel industry knows but appears to ignore is the over-supply issue that was pushing the price down. This trend should reverse with the assistance of the Indonesian Government Policy, it may even force people to look elsewhere. Albeit the saving grace is the quality/grade from Indonesia. If you consider the stock levels to be a reverse graph, where global stocks have dropped to say 15K tonnes (approximate) the price has hit new highs...a standard correlation between supply and demand.
To me it looks like Indonesian companies are going to carry on mining on the basis that there is a U-turn in the ban, but for how long. How long can they afford to mine without sales funding mining costs? One thing the Nickel industry knows but appears to ignore is the over-supply issue that was pushing the price down. This trend should reverse with the assistance of the Indonesian Government Policy, it may even force people to look elsewhere. Albeit the saving grace is the quality/grade from Indonesia. If you consider the stock levels to be a reverse graph, where global stocks have dropped to say 15K tonnes (approximate) the price has hit new highs...a standard correlation between supply and demand.
 |
| London Metals Exchange prices 2007-2014 |
China appears to have managed to stack enough Nickel for 6 months production and around 12 months of Bauxite. Indonesia's Bans Ore Exports in Push for Metal Smelting seems to be totally ignorant of the time it will take to be able to process it. I wonder how these policies are view in terms of global trade agreements, will they continue to supply China on the 'QT', as they can't afford any spat there. 1/7th of the Indonesian economy is reliant on Chinese trade.
The main driver for Nickel will be those companies who are forced to pay a premium and this should drive the price in the short term.Will Indonesia change its policy for Nickel and Bauxite, it appears only when there's enough internal pressure.
No comments:
Post a Comment