(different source used than daily updates) The week began when markets opened Monday at $22.91/lb, reached a high of $23.00/lb, a low of $22.61/lb, and ending at $22.88/lb. Tuesday, markets would open at $22.97/lb, climb to $23.13/lb (the high for the week and shy of the $23.50/lb record), then tumble to the low of $21.82/lb, where it would end the day. Wednesday, markets opened at $22.32/lb, which was as high as it would get, fall to a low of $20.76/lb, and end at $20.93/lb. Thursday, would prove the low point of the weeks trading, with markets opening at $21.00/lb, seeing a high of $21.46/lb, a weekly low of $20.42/lb, and ending the day at $20.59/lb. Friday would open at $20.59/lb, climb to $21.39 after seeing a low of $20.50/lb, and ending the day and week at $21.20/lb. Based on ending prices, the price of nickel fell approximately 8% from last Friday, but still remains 40.4% higher than it started the year at. One year ago today, nickel was $10.43/lb, two years ago, $7.47/lb, and four years ago tomorrow, nickel would breech the $4.00/lb mark.

The CRU Stainless Steel index shows during this same period the cost value of stainless has gone from 97.38 in May 2003, to 136.58 in May of last year, to 238.91 this month. For those who like to draw parallels, the price of crude oil contributes 42.6% to the retail price of gasoline, while nickel is normally responsible for around 2/3 the cost of 300 series stainless steel (proportionately higher now). In 2003, a barrel of oil averaged $32.51 and the price of gas in the US reached a seasonal high of $1.73/gallon. A barrel of oil Friday would cost you $65.54 (down from $79 barrel last summer) and the average price of gasoline in the US is $3.23/gallon (peaked at $3.11 gallon last year). While there are parallels between the two, there are numerous differences, the biggest being the direct effect politics plays on the price of petroleum. And while politics has an impact in any international trade, nickel included, if our memory is correct, World War Two was the last time the world saw major battles fought over nickel mines.

Then again, there is Cuba. Yes, we speak of that tiny, half occupied, nearly bankrupt island, just miles from our own coast, and its vast resources of nickel. Nickel, we might add, that is forbidden by U.S. law, to find its way into any product purchased in the United States. And if you think we are kidding.... we aren't. No matter what - we have to keep our principles! :-)

   Two reports - Fortis Metal Monthly - pdf here  and the Fortis Asian Metals Monthly - pdf here

  NMA Mining Week - pdf here

  Vale Says Voisey's Bay Nickel Refinery Resumes Production - "Cia. Vale do Rio Doce, the world's second-largest nickel producer, said nickel production at its Voisey's Bay project in eastern Canada resumed last night after safety concerns shut a refinery." - article here   RCMP probe labour spat at Voisey's Bay mine - "The RCMP are investigating an incident of labour friction at the strike-bound Voisey's Bay nickel mine in Labrador, amid an ongoing walkout and an NDP call to outlaw replacement workers." - article here

  Stock analysis by Galaxy Securities for Taigang Stainless Steel - (translated online, but you'll get the point) "Although nickel price increases contributed to nickel stainless steel prices continuing to rise, the escalation of consumption among domestic high-end clients including petrochemical, automotive, liquor and other industries, can still digest nickel stainless steel price increases. Meanwhile nickel stainless steel price increases driven non-nickel stainless steel market sales brisk." In another article on the company and posted on China Finance Net -  Taigang estimates the ratio of 400 series to other types of stainless they will sell will climb from "31% in 2006, to 40% this year". And more interesting forecasts for the stainless steel industry as a whole in China - translated article here

  Arroyo brings 1 million US dollars in investments from Tokyo - "President Gloria Macapagal-Arroyo arrived Friday afternoon from her four-day visit to Japan bringing home with her more than US$1 billion worth of investments, mostly in mining." - article here

  Behind The Big Nickel Bidding War - "No wonder Norilsk Nickel and Xstrata are fighting over LionOre Mining International; according to the international investment bank, Credit Suisse, world nickel prices could continue to rally and even reach $US65,000 a tonne this year." - article here  (we would be surprised if the little blurb we posted Friday doesn't get some more attention in the coming weeks - "Kommersant - Norilsk shareholder and former CEO Mikhail Prokhorov, the only board member to vote against upping the bid for LionOre, thinks a deal on such terms is too risky for the Russian mining giant". Takeovers are a generally a positive sign for long term commodity prices, but when a company executive of this caliber disapproves of a takeover, it could be seen as bearish.)

  Comment - Possible problem on the horizon for Xstrata in New Caledonia? On May 6, Radio New Zealand mentioned a study that had  just been published by the University of New Caledonia, which found cases of mesotheliomas were 30 times higher in New Caledonia than in France, and particularly, extremely high among tribal members in the northern part of that country. There are numerous reports posted online that show the mining of nickel  itself, does not increase cases of mesotheliomas, a cancer brought about by inhaling asbestos fibres. It does appear, however, that northern New Caledonia contains many deposits of asbestos rock. When this rock is cleared, the air is filled with asbestos fibers, which have been found to be harmful to humans. Will the construction of the Koniambo mine, with its infrastructure requirements, cause these deposits to be disturbed? We don't know, but if they are, you can bet we will hear more about it.  

  LionOre shortsighted on Xstrata break fee - "Suppose the bright lights at Inco had done things differently. Suppose, when they tried to buy Falconbridge a couple of years ago, they'd used an iron fist instead of velvet gloves." - article here

  China's share-buying binge could get ugly -  (quote) "The stock market bubble has now pulled in so many of the emerging middle class - the number of trading accounts has risen to nearly 100 million - that a crash will be a political problem." - more here

  PBS reports - Frontline - 63 episodes now online here / Nova episodes online here / Watch Al Jeezera English, and other news and tv channels online for free here

With 2/3 of nickel going to stainless steel producers, those who mine nickel, pay close attention to the reaction of this important customer base. While investors demand the highest return possible on their investment, the mining company, who will be in business long after the shareholder has taken their profits and bailed, must look at business thru binoculars, instead of a shareholder's microscope. The economic revolution in China, the likes of which has never been witnessed in human history, has been the primary cause for the incredible price increases. This sudden shift, from a fairly predictable trend of supply and demand, established over years of statistics, to one of such dramatic extremes, has forced the industry to scramble to find its way. Amongst this chaos, those who can produce nickel, and even those who hope too someday, have reaped the financial bonanza. On the other hand, the users of nickel, have been forced to endure the negative effects of the supply and demand spectrum, with no immediate relief in sight.

The situation has forced stainless steel users and producers worldwide to look at their options. Not yet a century old, the numerous years it has taken to convince a hesitant market of its higher priced economic value, is now being tested. While the substitution warnings of the past could best be described as idle threats, the extreme nature of the price increases in nickel witnessed by the market since last fall, have left many with no alternative. Even those who scoffed at these options last year, have grown silent, as the situation worsens. The stainless steel industry as a whole, suddenly in jeopardy of losing a hard fought for market share, is being forced to redefine itself. China, the largest consumer of nickel, and largest producer of stainless, is pursuing two primary paths. First, it has sought alternative sources of nickel, importing low content ore that for years has been discarded in stockpiles as too uneconomical to process. Second, it has begun to push alternative grades of stainless steel containing less nickel. The list of both grows larger by the week.

Old beliefs are being questioned and market alliances are under sudden strain. The scrap industry, a major source of recycled nickel to stainless producers, fears the lower nickel 200 series stainless will contaminate their recycling system, as its non-magnetism will make it nearly impossible to distinguish from the nickel containing 300 series. Distributors of stainless steel have been reluctant to add another grade to already expensive inventories, and the financial risk involved with introducing a new line to reluctant customers. There are also concerns about availability, with some producers equally reluctant. Users of stainless steel and their engineers find the price difference appealing, but the lack of a track record, puts many in the position of waiting to see what their competitor does. Now there is growing evidence that some of the competitor's are starting to switch, and the risk that Mr Michelmore warned of years ago, could snowball into the reality nickel producers fear. Nothing could be worse for the nickel industry than to see demand begin to wain, just as future sources of supply are on the horizon.    

Anyone familiar with the corrosion resistance abilities of 300 series stainless, must acknowledge that there is a market for 200 series stainless steel. The proponents for this metal, largely ignored for years, have suddenly found an audience. Allegheny Ludlum, which has produced the grade for years, is so confident of the market potential it has recently trademarked the phrase "The Switch Is On™" for marketing purposes. Allegheny CEO Patrick Hassey, told Maria Guzzo of American Metal Market , that "It's doing nothing but gaining traction and growing. We've more than doubled our shipments in the first quarter (versus 2006)." According to the AMM article, North American Stainless has recently added 200 series to its product line, and ThyssenKrupp AG is considering it. Depending on which report you read, 200 series accounts for about 10% of world stainless consumption. Few would dispute that share is on the rise, and cutting into the 65% share currently held by 300 series, especially in the Asian market.

With evidence mounting that the nickel industry could potentially be biting off their nose to spite their face, will it matter? Doubtfully. Stockholders, even those who invest long term, hold the option to pull their financial investment at anytime they see the risk growing. Unconcerned about the long term picture, they want the price of nickel to go higher, and their company to sell more...now. Commodity managers, fund managers, and those controlling billions upon billions of dollars for mostly passive and disinterested IRA investors, seem to thrive on the volatility of the market. Except for the commodity managers, they are only here as long as they can make money, whether the market moves up or down. In the real world, nickel producers are mining as much nickel as possible to keep up with current demand requirements. While some may be legitimately concerned that the future market share of their biggest customer base could potentially dwindle, just at a time when new supply becomes available, the growing use of low grade nickel ore, and the loss of some stainless steel in today's market, may actually add some temporary breathing room. The question remains... at what future cost will this temporary relief come?           

  Ok it's a little slow in the news department, so here is some sports for the nickel miners out there - "A date with history beckons for Mwana Africa today as the Bindura miners seek to wipe out a one-goal deficit and overcome giants TP Mazembe in a Caf Confederation Cup third round tie at Rufaro....Mwana Africa are still unbeaten at home in the Confederation Cup. The gold and nickel miners have actually conceded only one goal at home so far in the competition..." - here

  And finally - Deep-sea mining can irreversibly damage marine ecosystem - "Undersea habitats supporting rare and potentially valuable organisms are at risk from seafloor mining scheduled to begin within this decade, according to a new study by a University of Toronto Mississauga geologist." - article here

Well it's already the weekend on the other side of the globe, and in a few hours our neighbors to the north, begin an extended one. We leave you with a film clip to give you something to laugh about (video here) and wish you all have a safe and restful weekend.

   Russia's Norilsk Nickel Eyes Nickel Asset Buys - "Russia's largest metals producer, Norilsk Nickel Mining & Metallurgical Co., plans to acquire new nickel assets, Chief Executive Denis Morozov said Friday, according to Prime-Tass news agency." - article here

  (couple days old) Shortage of chrome ore further hits steel makers - "India’s estimated Rs20,000 crore stainless steel industry, already reeling under the effect of soaring nickel prices in the global market, is now facing shortage of another critical input, chrome ore, with the mineral’s largest producer in the country, Tata Steel Ltd, stopping supply from 1 April." - article here

  CISA urges steel makers to increase control on iron ore purchase - "It is reported that China Iron & Steel Association is greatly concerned about the upcoming benchmark ore talks in view of soaring ore imports in the first quarter amid ever-increasing freight rates." - article here

  China's iron ore imports up by 23% YoY in 4 months - "Xinhua citing China’s General Administration of Customs reported that China's imports of iron ore has been recorded at 133.6 million tonnes in January to April 2007 up by 23.36% YoY as against 108.3 million tonnes in January to April 2006." - article here

  Tidal Wave of Steel - "What motivates the continued huge surge in Chinese steel production? Is it market ineptitude, policy paralysis or a determination to swamp the rest of the world with unneeded metal?" - article here 

  (comment - this article is making its way around metals sites, and forums, as if it were new...notice the date on the original publication) China’s Hunger for Nickel Growing, Imported 3.78 Million Tons of Nickel Ore in 2006 - re-hashed article here

  Indications  at 7:50 am CST show nickel selling up by $.10/lb . (Bloomberg - more) Looks like nickel traders are taking a breather today, after yesterday's corrective movement. Have we found a new floor, or is there more correction coming? Stay tuned. 

  Some nickel timbits for the holiday weekend - "The current Canadian angst about selling out the country’s corporate gems reminds me of the old saying, “Closing the barn door after the horses have already escaped.” Where were these business nationalists when the extraordinary metal treasures of the Sudbury Basin – the richest mining district in North America and among the top ten most significant globally – were being sold?" - article here

  Courtesy Hoover's Inc - China base metal production - nickel production in April 18.2% higher than same month 2006 - 23.8% higher in first quarter of 2007 compared to same quarter in 2006.

  News Bites - Finnish stainless steel group Outokumpu Oyj to participate in Talvivaara nickel mining project in Finland" - "China's iron ore import prices rise on booming demand and tight freight" - "China to further raise bank reserve ratio 0.5 pct points to cool investments" - "Taiwan' s Stainless Steel Prices may Keep High in Q2 & Q3" -

  Steel cost high as demand falls a bit - "Steel prices remain stubbornly high even as demand for the raw material has weakened and there have been some dips in prices in recent weeks." - article here

  Korea starts first molybdenum smelter, eyes exports - "South Korea, the world's fifth-largest steelmaking nation, opened the nation's first smelter for molybdenum, used to strengthen the alloy, to cut costs and export to Japan and Taiwan amid surging prices." - article here

  MEPS: Stainless HR price to stabilize in summer - "The transaction price of stainless steel grade 316 hiked again for all areas in May, according to MEPS." - article here

  Today's beginning nickel inventory - minus 42 tons = 4,824tonnes (18.0 %  - 876 tonnes cancelled warrants)

Opinion - There appears to us to be three basic types of traders. The first is the all-the-time bull. They are the kind that can stand in chest high water, during a flood, and tell you this will really make their yard green when it finally subsides. They are the eternal optimists, and for the last 4 years, have had things pretty much go their way. And then there are the eternal pessimist's, who standing in the same chest high water, will complain about the ten year drought, that is sure to follow. The bears have been dragged kicking and screaming into this bull market, and there are some out there, so radical, that they have never acknowledged the increase in nickel from $3/lb to $23/lb is anything more than a 'really, really big bubble'. And finally, there are the free-thinkers, those who maintain their perspective, and are open to market conditions. They don't see a greener yard, they don't see a drought, they just worry about keeping their head above the water. And the market, for them, has entered one of those nerve wracking periods. The overall fundamentals for nickel remain strong, but the list of "unknown's" is growing. China's direct importing of low grade nickel ore and gains in low or no nickel substitution are legitimate demand concerns. On the other hand, nickel inventories are lower today than they were at the beginning of this month, and there are no new sources that can add to the supply parameters anytime soon. So what will happen in the next 30 days? We recommend you flip a coin. Your chances of being right are probably better than paying an expert for their opinion.       

  Anti-Mining NGOs Most Serious Threat To Industry - IMC Exec - "Anti-mining non-governmental organizations, or NGOs, are the most serious risk facing the mining industry today, the president and chief executive of Canadian mineral resource company International Minerals Corp. said Wednesday." - posted on forum - more here

  News Bites - "Asian hot rolled and cold rolled stainless prices have surged $300-$400 per tonne as nickel prices continue to rise" - "Jinchuan's April nickel output exceeds target by 4.62%" - "US April steel shipments of 4.5 million tons were 1.5% lower than 2006 volume marking the eighth consecutive month of YOY monthly shipment declines. Shipments for the first four months of 2007 at 18.2 million tons were down by 5.4% during the same period in 2006. Steel inventories declined for the sixth consecutive month to 14.6 million tons the lowest level since May 2006 although still 4.5% greater than the April 2006 inventory total." - AISI Monthly Steel Statistics (here) -

  Indications at 7:55 am CST show nickel selling down by $.30/lb . Cash nickel is down even more, which is helping to narrow the backwardation between the two. Over the past few days this level had become quite extreme, and at the current time, indications show it is still running at about $3000/tonne. On the other hand, cancelled warrants fell below 20% today, for the first time in a very long time. So with the positive news, comes the negative...how it will affect the market, is anyone's guess.  Tune in later and we will let you know. (Reuters - more)

  New Bites - "China imported 35,620,000 tons of iron ore valued at 2,591.585 million US dollars in March 2007. The import in January-March reached 100,180,000 tons valued at 7,079.949 million US dollars, up 23.4 percent and 39.7 percent respectively year on year." - "According to the National Bureau of Statistics (NBS), China’s crude steel production has reached 40.32 million tons in April, up by 20.4 percent compared to the same month last year, however, the figure only up by 0.4 percent compared with that in March this year." - "American ferromolybdenum price has also increased to US$34~36/lb when molybdic oxide price also reached US$30~32/lb." - "India's Jindal Stainless (JSL) has announced to set up a 800,000 tons per year stainless steel plant in Orissa." - "China's ferro-chrome prices to stay high on strong stainless demand" - "ThyssenKrupp developing lower or non-nickel products" - "China's industrial production was up 17.4 percent in April compared with the same period last year, according to the National Bureau of Statistics (NBS)." - "Shortage of chrome ore further hits steel makers" - "Digging Into Big Miners(more)

  Young people trained in the middle of Goro Nickel - "The center of formation of Goro Nickel was inaugurated yesterday. Located in full heart of the factory site, it is pressed in particular on the installations of the old pilot factory." - translated article here

  Standard Bank to Dow Jones - "..High prices a concern for stainless steel market, suggestions market starting to witness demand destruction; "with this in mind we continue to remain very cautious towards nickel with a move lower expected to manifest in the short term."

  Norilsk Nickel announces production figures for 1Q 2007 - "Norilsk Nickel has announced preliminary consolidated production figures for 1Q 2007. The company has fulfilled its 1Q production plan. The group produced 61,000 tonnes of nickel, 101,000 tonnes of copper, 716,000 ounces of palladium and 169,000 ounces of platinum from Jan-Mar 2007." - article here

  Today's beginning nickel inventory - minus 6 tons = 4,866 tonnes (18.74% - 912  tonnes cancelled warrants)

We are now seeing reports that chromium is trying to get into the act. India's decision a few months back to add an export tax, and South Africa's clamp down on shipments of chromite ore, has forced China to scramble for supply. This had led to spotty shortages in Europe and North America, which in turn, has led to price increases. Iron ore prices continue to rise, the most recent increase of 9-1/2% taking effect in April. Last week, metals analysts RBC changed an earlier forecast of a 25% drop in price to a 15% increase this year. And molybdenum prices continue to creep up with a very solid outlook forecast, with a few even suggesting it has the potential to increase in price dramatically.

  Nickel, lead at forefront of industrial metal price hike - "Disrupted production, falling stocks and positive US data combined to lift industrial metal prices to new highs on Friday." - more here

  News Bites - (copyright/courtesy Dow Jones Newswire) - Nickel Shipment Leaves Australia's Esperance On Schedule - "Nickel concentrate loading at Western Australia's Port of Esperance concluded as planned during a Department of the Environment and Conservation inspection over the weekend, which found only minor problems with the loading process.......The two main companies that ship nickel concentrate via Esperance are LionOre Mining International Ltd. and Jubilee Mines N.L. Esperance shipped 194,136 tons of nickel concentrate in 2006." (more here) - "Standard Bank says piercing of $50,200 level reinforces view metal has momentum to head toward $54,500, particularly if decline in stocks continues."

  POSCO to raise stainless steel prices - "POSCO Co. Ltd. , the world's third-largest steel maker, will raise prices of stainless steel products by 400,000 won ($431.3) per tonne due to higher costs of nickel, a key raw material, a company official said on Monday." - more here

   Stainless steel prices soaring continuously - "The stainless steel price has been soaring continuously while the nickel price on the LME has been increasingly rising." - article here

  World crude steel production up by 10.2% - "According to International Iron and Steel Institute (IISI), the world crude steel production was totaled 318.3 million tons in the first three months of 2007, increasing by 10.2 percent from the first quarter of 2006." - article here

  Acquisitive Norilsk forecasts nickel supply deficit - "The world’s biggest nickel producer, Norilsk, which last week announced a counterbid for Canada’s LionOre, forecasts a deficit in global supply for the silvery-white metal, as a number of big industry projects have been delayed." - article here

   Rio asks for 30 year permit for mining nickel in Indonesia - "Rio Tinto Group announced that a planned USD 2 billion nickel project in Indonesia may not proceed without the company getting an extended forestry permit." - article here

  Call to clamp nickel exports - "A group of Esperance residents wants tighter controls on nickel exports from the town, claiming bulk exports of the metal should be stopped and the product shipped in containers to protect the community." - article here

  Global prices may nullify nickel duty cut gains - "The FM’s announcement of a duty cut on nickel from 5% to 2% is unlikely to benefit domestic stainless steel players. A day after Mr Chidambaram made the announcement, the price of nickel for 3-month delivery at the London Metal Exchange (LME) zoomed by nearly $300 over Thursday’s close to breach the psychological $50,000 per tonne mark." - article here

  Environmental group in New Caledonia to have more talks over Goro Nickel project - "Brazil’s Companhia Vale do Rio Doce, or CVRD, has given its final approval for the 3 point two billion US dollar Goro Nickel project in New Caledonia, despite delays, cost explosions and quarrels with some locals." - article here

Foreign ownership of mining interests is common throughout the world. And while Canada resisted China's attempts to buy some of its largest nickel mines, it did not stop Brazil and Switzerland companies from doing that very same thing last year. And many of Australia's mining interests are already owned by foreign companies. So, why the hesitation on our part? It comes down to who holds control of the company. If CVRD, BHP, Rio, etc, stay in independent, market driven, free from governmental controlled hands, then we witness a global economy at work. But if suddenly a government take over a company, then that government now has a degree of control of another countries assets. Russia is a country that has yet to fully identify itself politically. And it is an economy on the rebound. And while we would like to believe we live in a get along society between economic powers, we are witnessing smaller governments seizing control over mineral assets in South America and Africa even today.

We live in a country where the government can't get over losing Cuban mineral assets to Cuba governmental control nearly a half century ago, so we have little room to voice an opinion. But we thought we would throw this out as food for thought.

  ADB provides 150 mln dollars for Madagascan mining project -"The African Development Bank ( ADB) has agreed to provide 150 million U.S. dollars to finance a mining project in Madagascar." - more here  

  CVRD Inco invests $445 million in Sudbury mining projects - "The company announced today (Friday, May 4) that it will spend $400 million (CDN) to reopen Totten Mine in Worthington. The company expects to create 150 new jobs by the time the mine is in full operation in 2011." - article here

  (comment - we monitor this as Sulawesi island is home to PT Inco) Indonesia: Jemaah Islamiyah’s Current Status - "In late March 2007, arrests by Densus 88, the police counter-terror unit, netted seven detainees in Central and East Java (an eighth was killed); a huge cache of explosives and weaponry; and documents that seemed to suggest a new military structure for Jemaah Islamiyah (JI), the region’s largest jihadist organisation. The arrests followed directly from information obtained from operations in Poso, Central Sulawesi, in late January." - article here

  It's the weekend, where we let the other side have a little space. We try to keep this site balanced, which means we aren't afraid of our readers seeing what the "other side" has to say, no matter how far out in left field we might think they might be. And while censorship is simple paranoia, in a society where everyone has the right to make a speech, we all share the right to make an a-- of ourselves too. Here are two about the Skye Resources project in Guatemala. Wall Street Journal article - pdf here and This Magazine - here   More on our thoughts on the Skye project here  

  A Woman in a Mine’s World - "National roundtable on mining fails those struggling against Canada’s corporations abroad" - article here  (please note - this article is published by a well known anti-mining organization with an agenda.)

  "Mattagami First Nation, Liberty Mines sign MOU" - more here (We would love to tell you this level of cooperation between the indigenous landowners and this mine would make big news with the NGO's, but if we see anything written about this by them, it will probably be about the higher than average suicide rate among the native people of Canada, and somehow try to make that the fault of the mining company) 

  Regretfully, we are unable to publish our weekend report for nickel prices. We would like to claim, that as stainless steel consumers, we just didn't have the heart, but our sources did not publish this week. We apologize to our readers, and will resume posting the info next weekend. 

April entries

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All prices, unless marked official closing prices, are indications only of LME 3 month buyer traded prices and courtesy newswire services. To understand what our prices mean, see "A Guide To LME Trading"...pdf here or "The ABCs of a Metals Exchange" ...pdf here (Molybdenum prices are for molybdenum oxide, an ingredient and major price factor in 316 stainless) (all ton listings are metric tons = 2204.6 pounds ) Updated daily before 8 am CST and before 1 pm CST weekdays, with some weekend updates - Disclaimer Original content and opinions copyright www.estainlesssteel.com