The roller-coaster ride nickel has been on this year took a downturn recently when the morning spot price of the base metal fell to $5.08(US) per lb on the London Metal Exchange (LME) and the 3-month price to under $5.
A slight recovery by press-time saw the metal rise to $5.31 spot, with the 3-month price posted at $4.99.
Reasons for the price decline — the LME spot price stood at about $6 at the first of September — are unclear.
Stocks of the metal on the LME are low, which would seem to indicate a tight market. On the other hand, one analyst said there has been a slight softening in flat-rolled stainless steel, with some mills turning back their lead times. (Stainless steel accounts for more than 50% of the metal’s industrial use.)
The market may also have been anticipating a longer strike by workers at Falconbridge Ltd. (TSE); the August contractual dispute lasted about a week.
The market is unsettled, one analyst noted, adding that the weaker side appears to be dominant.
David Graham of the public relations department at Inco Ltd. (TSE) said the giant nickel producer foresees the market continuing strong for the metal. “The basic supply- demand fundamentals haven’t changed,” he said.
Nickel, which averaged $2.21 in 1987 and $1.76 two years ago, reached $10.84 in March. The nickel price averaged $6.35 during the first eight months of 1988.
On the precious metals watch, gold has fallen into a further slump, recently hitting $419.40 per oz in London. After a slow summer of narrow trading, gold seems to be reacting to a strengthened U.S. dollar and reduced fears of inflation, analysts say.
International investment house Shearson Lehman Hutton draws a parallel between sinking oil prices and gold’s possible decline. “If the oil market was to collapse, then the $420-$425 level would come under test,” Shearson analysts wrote recently, adding that “failure at $420 would imply a short-term test of the $400 level.”
If the gold price did fall that low, Shearson foresees a recovery to $425, but nothing to sustain a bull run after that level.
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