Nickel, Copper Prices Will Rally and Firm Up This Year-BMO
Source: Mineweb, Dorothy Kosich (3/29/10)
"The likely shift into deficit conditions should also continue to drive LME inventories lower"
In a note published Sunday, Melek advised, "Given the need to restock consumer inventories, the strengthening global recovery and higher stainless smelting rates should continue to rally both nickel and copper into 2010."
"The likely shift into deficit conditions should also continue to drive LME inventories lower, likely at a faster rate than in the last several months," he said. "The market is already reacting to this as prices tend to move 30–90 days ahead of actual inventory declines."
Melek noted that LME nickel inventories have dropped 6.3% to a three-month low, "albeit from high levels." BMO anticipates a fairly deep 36kt deficit this year partly due to delays at the Goro Nickel project and a strike at the Vale Inco operations.
Meanwhile copper LME stocks have declined 6.9% and "demand is projected to firm materially," up 7% this year. Melek forecasts that the copper market is expected to be in deficit until 2011.