16.10.2006
Nickel prices could prices to new highs; company may begin to mine chrome
Nickel prices pushed through $33,200/t ($15/lb) on Friday, newswires reported, and may now test the record high of $34,750/t set on August 24, as the French company Eramet struggles to cope with the fall-out from strikes over the past two weeks in New Caledonia. Eramet is the world's fifth largest producer of nickel, with roughly 8% of the projected global output for 2006 of 1.3mn tons.
Union officials managing the strike have stated that no nickel would be shipped from the island this week, which could result in the suspension of operations at Eramet's refinery near Le Havre in France. Given the sharp deficit of nickel on the market in 2006 and the negligible world stocks (as reflected in LME market data), we expect nickel prices to remain firm and potentially test new highs, with Norilsk Nickel as a natural beneficiary of the situation.
In separate news, Norilsk Nickel announced that it may start mining the Sopchegorskoye chrome deposit, which holds 9.5mn tons of ore (including an estimated 45% of Russia's chrome ore) that the company believes could be mined commercially for 25 years, using open pit and underground methods. No projected capex figures were announced. Norilsk Nickel does not currently produce chrome, but we would welcome any plans for increased output of any metals, as this is one of the constraining factors in our valuation.
Our recommendation for Norilsk Nickel is Buy, with an end-2007 fair value of $176.
Quelle: Aton
@Benjamin, Du lagst gut mit Deiner Bewertung
