Australian nickel producer Mincor Resources expects the nickel market to perform strongly in 2015 and move back above the $20,000/mt level as demand is boosted by a booming US economy and a stock drawdown in China, company CEO David Moore told a conference in Queensland Wednesday, October 1.
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The LME nickel price stood at $16,505/mt Tuesday, but has largely traded in the range of $18,200-20,000/mt since Indonesia imposed a ban on nickel laterite ore exports in January, hitting a year-to-date peak of $21,500/mt in early May, LME data showed.
"I am pretty positive on the nickel price for next year and think we are going to endure weakness for the rest of this year and then we could see a nice step up," Moore told Platts on the sidelines of the Resources Rising Stars conference on Queensland's Gold Coast.
Most analysts were still forecasting strong prices for next year despite being a little less certain due in part to the increase in exports from the Philippines, Moore said.
China has relied on its own stockpiles of ore and imports from the Philippines to meet its requirements since the Indonesian export ban was imposed, but Moore said this was mostly lower grade ore and not capable of filling the void left by the Indonesian ban.
"My view is that the original thesis is still there, that is, that 20 million mt of laterite ore stockpiled in China has been chewed through, augmented a bit perhaps by the Philippines, but it will be chewed through within the next six months and after that there will be another increase in the price, maybe to $20,000/mt," he said.
Moore said demand for nickel looks healthy as the US economy picks up, Britain looks stronger and Europe was showing "vague signs" of life. "There is a slowdown in China but the US is still the world's strongest economy and that can have a huge impact," Moore said.
Mincor produces nickel ore at its Miitel and Mariners mines in the Kambalda district of Western Australia, which is turned into concentrate at Nickel West's Kambalda smelter.
Nickel West's current owner BHP Billiton said in August it was trying to sell the business.
Mincor has an offtake agreement until 2019 with Nickel West to sell all concentrate to the smelter at a price based on the monthly average of the LME nickel price, which Moor said would be binding on a new owner.
"Our concentrate is vital to the smelter which is the main asset at Nickel West. Whoever owns the smelter really needs to keep it full and it really relies on ores from central Western Australia," Moore said. Mincor produced 10,219 mt of nickel in ore in fiscal 2013-14 at a cost of A$4.96/lb ($4.29/lb) and targets producing 8,500 mt in fiscal 2014-15 at a cost of A$5.30/lb.