Glencore sees nickel prices climbing

The logo of Glencore is pictured in front of the company's headquarters in the Swiss town of Baar. File picture: Michael Buholzer

The logo of Glencore is pictured in front of the company's headquarters in the Swiss town of Baar. File picture: Michael Buholzer

Published Sep 21, 2016


Jakarta - Glencore, the commodities trader and miner, expects nickel prices to climb through 2018 as demand outstrips supply, assuming Indonesia continues its policy of curbing ore exports and encouraging local processing.

“We believe we’ve seen the bottom, both in terms of the actual spot prices experienced earlier this year and also in terms of the annual average we will see in 2016,” said Kenny Ives, the company’s head of nickel. “We expect spot prices to be higher and we also expect the average to be higher,” he said in an interview in Jakarta on Tuesday.

Nickel prices have advanced 16 percent this year on the London Metal Exchange as global stockpiles declined. The Philippines, the world’s largest shipper of mined nickel used in stainless steel, is carrying out an environmental audit and closing mines that don’t meet international standards, curbing supply. Output of stainless steel in China, the world’s biggest producer, has also been increasing this year as new capacity fires up.

The global deficit will probably be about 100 000 metric tons in 2016 in terms of nickel metal, and shortages will continue going forward, said Ives, who declined to give specific forecasts.

Indonesia’s ban

Indonesia halted the export of unprocessed ores in 2014, forcing companies to invest in domestic smelters as it sought to add value to its commodities locally and create more jobs. Ives said the policy had been a success and there will continue to be an increase in processing capacity in the country.

The ban in Southeast Asia’s largest economy encouraged ore exports from the Philippines. Newly elected President Rodrigo Duterte has ordered a clampdown on mining that’s hurting the environment, and Environment Secretary Gina Lopez said on Wednesday that it will halt 10 more mines in addition to the 10 suspensions already made.

Even without the suspensions, Philippine exports will struggle in a low price environment as resources get depleted, Ives said. The country could ship about 200 000 tons of nickel contained in medium and high-grade ore this year compared with roughly 300 000 tons in 2015, he said.

Chinese stainless steel production totalled 13.6 million tons in the first seven months of the year compared with 12.6 million tons a year earlier, data from Beijing Antaike Information Development show.

Nickel on the LME fell to $7 550 a ton in February, the lowest level in more than 13 years, as the economy in China expanded at the slowest pace in a generation. Prices were at $10 255 on Wednesday. The metal climbed to an intraday record of $51 800 in 2007.

Glencore is a global nickel producer and trader, dealing in metal, concentrates, intermediates and ferronickel, according to its website. The company estimated full-year nickel production at 116 000 tons in a presentation dated August 24, compared with 96 000 tons in 2015.


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