Nickel prices will rise to US$9 per pound in this year and US$10 per pound in 2011, say analysts at Desjardins Securities. <\/p>\n
Demand will continue to outstrip supply over the next two years, due to "ongoing strikes at Vale Inco's operations, unacceptable nickel laterite and a 'pick-up' in stainless steel prodution," said John Redstone and John Hughes in a note to clients. <\/p>\n
The analyst said the Voisey's Bay and Sudbury operations of Vale Inco, which combined produces 6% of the world's nickel, are firmly on strike and won't resume before the second quarter of 2010.<\/p>\n
Supply is also hindered by poor quality nickel laterite ore that is imported to China for use in nickel pig iron, a crude nickel-bearing product used primarily by stainless-steel mills. <\/p>\n
"According to the CRU, much of the material imported in 2009 had an unsuitable nickel\/iron composition," the analysts said. "CRU estimates that of the 9.3 thousand tonnes of ore currently stockpiled at Chinese ports, roughly 80% (7.7 thousand tonnes) is unacceptable."<\/p>\n
Meanwhile, sentiment has improved in the stainless steel sector and Mr. Redstone and Mr. Hughes expect prices to increase 8% in 2010 and 10% in 2011.<\/p>\n
They like Sherritt International Corp.<\/a>, FNX Mining Co. Inc.<\/a>, Asian Mineral Resources Ltd.<\/a> as their preferred nickel plays. <\/p>\n