##{"id":65190,"date":"2015-05-26T11:08:15","date_gmt":"2015-05-26T01:08:15","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2015\/05\/26\/treasure-chest-positive-signals-for-nickel\/"},"modified":"2015-05-26T11:08:15","modified_gmt":"2015-05-26T01:08:15","slug":"treasure-chest-positive-signals-for-nickel","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2015\/05\/26\/treasure-chest-positive-signals-for-nickel\/","title":{"rendered":"Treasure Chest: Positive Signals For Nickel"},"content":{"rendered":"

By Greg Peel<\/p>\n

The big news on the market yesterday was Independence Group’s ((IGO)) takeover bid for nickel miner Sirius Resources ((SIR)), which if successful would see nickel accounting for some 60% of Independence’ business. The bid came as no shock given the market had already been anticipating a possible move, thus pushing Sirius’ share price up recently despite a stagnant nickel price.<\/p>\n

Independence’ 88% scrip and 12% cash offer nevertheless represented a 33% premium on previous closing prices, suggesting the company is rather keen. Yesterday’s share price responses from the market have since trimmed the implied offer price but brokers are not ruling out a superior bid emerging.<\/p>\n

So it’s all happening in nickel.<\/p>\n

The bid would have come as no surprise to ANZ’s metal analysts either, given they have positive signs emerging for the nickel price. The analysts believe there are four main data points that will coincide to produce a tightening of nickel demand\/supply, and hence higher prices. Three of those data points have already fallen into place.<\/p>\n

When Indonesia banned nickel exports last year, in an effort to encourage the development of a value-add downstream processing industry in the country, the nickel price surged on the assumption global nickel supply would tighten to the point of deficit. But this hasn’t happened.<\/p>\n

Much depends on the “hugely influential” Chinese nickel pig iron (NPI) market, ANZ contends. And here it appears Chinese NPI inventories are finally beginning to fall. That’s ANZ’s first data point, and the second is that of rising NPI prices, which is also occurring as inventories reduce.<\/p>\n

The third data point is increasing Chinese ferronickel imports, which we are now seeing, and the last is falling London Metals Exchange nickel stocks, which is yet to occur.<\/p>\n

If LME nickel stocks do begin to decline then ANZ will be confident the nickel price has seen a bottom. Until that occurs, nickel price upside is likely to remain limited, the analysts suggest.
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