N.C. Mathur, President, Indian Stainless Steel Development Association, informed Reuters that a rise in nickel prices from $26,000 per ton in 2006 to $36,000 per ton had shocked the industry. Changes in duty of a number of commodities by the Indian government as a part of the move to check the rising inflation will make the imports more competitive, thereby adding to the manufacturing firms’ woes.
Mr. Mathur says, “Customers don't want to accept high prices in Asian markets and we have to absorb the price. That will hit the margins in the current quarter (January-March)
The nickel industry has been responding to the news of disruptions at manufacturing sites and at inventory levels. A threatened strike at Xstrata, a major nickel producer in Canada that accounts for a mere over 4% of the global smelting capacity, has taken the prices higher.
About two-third of the total nickel output (world) is used in the manufacturing of stainless steel, and the industry demand is projected to surge by 7.5% this year. Almost 70% of the stainless steel products manufactured by Indian makers have a nickel content at a low 1-4%, but the price hike would still affect them greatly.
"One percent nickel accounts for $400 per ton in the final cost of making stainless steel at current nickel prices. So it is still very expensive," said Mathur.
RNCOS report “Nickel Market Outlook (2007)” observes that nickel demand has risen with the rising prices of nickel scrap. The growing nickel demand is mainly attributed to the mounting demand for stainless steel. The supply-demand gap for nickel is widening with limited supply and growing demand. Considering the current situation, the demand-supply equation is anticipated remain out of balance till 2010. Moreover, market risk factors, like labor unrest, strikes, feed shortages, adverse weather conditions, slow restarts, and extended maintenance, would further restrict the supply side.
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