Nickel, majority of which is used to make stainless steel, has quickly turned into one of the weakest in the base metals bourse. The market was in a balance during 2010, which is now turning into a surplus, rendering the metal one of the most oversupplied in the bourse.
The International Nickel Study Group predicts the surplus of nickel to amount to 60000 tonnes for the year 2011 from a deficit of 30000 tonnes during 2010. In addition, the pig iron nickel production in China is rising expediently, which might put pressure on refined nickel traded at the LME. Pig-iron nickel is the substitute for refined nickel and analysts expect the production this substitute to rise 50 percent this year in China.
The market is shifting into a surplus situation and this shift has come at a time when the global economy is in a trough. The manufacturing activity around the globe is rather grim, the US employment and housing market is yet to emerge from lows.
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