Nickel prices top $3

Buoyed by an increase in stainless steel production and a shortage on the supply side, nickel this month saw its price top the $3(US) per lb mark.

It has been a remarkable recovery for the base metal, which in January of this year was riding a 5-year low in the mid-$1.50 per lb range.

According to Shearson Lehman, a strong demand from the consumer goods industry and an increase in orders from the capital goods and petrochemical sectors have also contributed to the market tightness.

Shearson says nickel output by the world’s non-Socialist producers is likely to exceed last year’s total by 9%, but it will not be enough to meet demand. Producers are reported operating at or near capacity. Coupled with the rise in stainless steel production is a shortage of stainless steel scrap. Also, nickel exports from the Soviet Union are down from last year.

Martin Webster, manager of market planning for Falconbridge Ltd., said demand for stainless steel in, for example, the manufacture of sinks (brought on by the housing boom), has moved into a more capital intensive phase, and is being sought for parts used in the construction of new buildings and plants.

The nickel market will probably remain tight during the first half of 1988, Shearson forecasts, with demand staying strong and supply rising only moderately.