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LME nickel inventories at 'turning point': Norilsk Nickel

London — Russian metal producer Norilsk Nickel said Monday it expects high LME nickel inventories to be at a 'turning point' with a likely decrease in the near term.

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"We believe the stocks are going to come down and that this is going to drive the prices," Norilsk Nickel First Deputy CEO Sergey Dyachenko said in an interview with Platts Monday.

LME nickel stocks have grown significantly over the last year, hitting record high levels above 435,000 mt.


According to exchange data out Monday, global LME warehouse nickel inventories currently stand at 443,622 mt.

Norilsk Nickel said that around 40% of the increase was a result of the relocation of metal from Chinese bonded warehouses.

However, the company expects LME and non-LME stocks to be drawn down with the market moving into a deficit over the next two years.

In its 2014 results, Norilsk Nickel said it expected the market to move into a 20,000 mt deficit in 2015 after a surplus of 93,000 mt in 2014.

Norilsk said that primary nickel consumption from the stainless steel sector is expected to grow around 4% this year, with consumption from the non-stainless steel sector to grow around 3% over the same period.

It is forecasting global nickel demand of around 1,969,000 mt in 2015 and 2,050,000 mt in 2016.

Nickel ore stocks in China are now estimated to be around two months of consumption and due to the Indonesian ban on nickel ore exports, Chinese nickel pig iron production is expected to fall to around 364,000 mt this year, from 471,000 mt in 2014.

As a result China's dependence on imported refined nickel is set to rise.

Norilsk Nickel estimates that total nickel demand in China in 2015 will be made up of 42% imported refined nickel, 47% imported feed, and around 11% of domestic feed.

In 2014, total nickel demand in China consisted of 28% imported refined nickel, 61% imported feed, and 11% domestic feed.

Three-month nickel on LMEselect was trading at $13,880/mt at 1038 GMT Monday.

--Greg Smart, greg.smart@platts.com
--Edited by James Leech, james.leech@platts.com