HAVE A GREATER INFLUENCE ON NICKEL PRICES
MEPS International Ltd has
often observed that commodity prices tend to follow the trends in
global financial markets, instead of being driven by fundamentals.
More specifically, the price of nickel-bearing stainless steel has
been disproportionately affected by institutional investors on the
commodity markets, rather than by the supply and demand outlook for
the physical metals.
However, in the recent past, there has been a divergence between
commodity values and other economic indicators. For example,
London's FTSE 100 Share Index has increased by over 8 percent since
the beginning of 2013. New York's Dow Jones Industrial Average has
climbed by over 10 percent during the same period and recently
achieved a record high figure. In contrast, the LME Nickel Cash
price, in common with the values for other traded metals, has fallen
in the last three months.
It appears that the metals markets are behaving how we would expect
them to, according to fundamental factors, while speculators have
preferred to take a punt on rising equity markets. US stock prices
have been boosted by a number of positive economic results and
forecasts. The most recent hike in share values came on the back of
the announcement of a further improvement in employment figures, for
On the other hand, news coming from China has been less encouraging.
Growth forecasts have been revised downwards. Government moves to
restrict the real estate boom in the country have had a negative
effect on global metals markets.
This may point to a swing in the influence of different factors on
commodity prices. The burgeoning industrial development in the
emerging nations of Asia and elsewhere may have tipped the balance.
The fundamentals of supply and demand will have a greater effect on
the price of steel, metals and other commodities, while the more
hypothetical trends of the Western financial markets will hold less
Stainless steel consumption is subdued, at present and is predicted
to remain so in the near term. Consequently, nickel supply will be
in surplus, this year and stock levels will continue to grow.
Selling values are likely to move within a narrow range and we
forecast the average LME cash figure for this year to turn out
slightly below that for 2012.
Source: MEPS -
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