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1
INTERNATIONAL NICKEL STUDY GROUP
INDUSTRY ADVISORY PANELLisbon, Tuesday October 6 2009
STAINLESS STEEL AND NICKEL MARKETS:2009 OUTLOOK
STAINLESS STEEL AND NICKEL MARKETS:2009 OUTLOOK
DES ALLIAGES,DES MINERAIS ET DES HOMMES.
NICKEL
1)
THE STAINLESS STEEL MARKET:
PRODUCTION & CONSUMPTION
Source: Eramet Ni Research 2
2
THE STAINLESS STEEL MARKET: PRODUCTION BY ZONE
Asia: China
-Amazingly, Chinese stainless steel production went from a low point in November 2008, when mills were operating at 30 % of their capacities, to a Q2 2009 where quarterly production surpassed the levels of Q1 and Q2 in 2008.-Given an increase in stocks of stainless steel (stocks at Foshan and Wuxi were back to the level of May 2008), we have assumed a correction starting in September.Chinese output is forecast at 8 3 MT +15 9% vs 2008
NICKEL
8 000
10 000
Stainless steelproduction in
Stainless steel in China
2 400
June 09 Forecast September 09 Forecast2008 2009
7.1 M t (-3.6%)
Quarterly Stainless Steel production in China
8.3 M t (+15.9%)
-Chinese output is forecast at 8.3 MT, +15.9% vs. 2008. -Our forecast is at the low end of the range of forecasts made by other analysts.
Source: Eramet Ni Research 3
0
2 000
4 000
6 000
8 000
2000 2001 2002 2003 2004 2005 2006 2007 2008E
2009F
' 000
MT
production inChina (melted)
Import Chine
Export Chine
800
1 200
1 600
2 000
Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09
' 000
T
-21%
-25%
+56%
+18% -4% -16%
THE STAINLESS STEEL MARKET: PRODUCTION BY ZONE
Asia: Taiwan / Korea / India / Japan
-The Taiwanese and Korean producers also benefited from the Chinese situation and returned to full production in Q3, (one quarter later than their Chinese competitors). We believe that production will decline in Q4, in line with the fall in apparent consumption in the Chinese market.-The Japanese producers maintained levels of production in the 2nd half of 2008 which were too high. As a consequence they still had high stocks in the early months of 2009 and drastically cut output in Q1. Capacity utilisation rates nevertheless increased significantly reaching 80-85% at the end of August Japanese
NICKELQuarterly Stainless steel production - Taiwan and Korea
900
1 000
June 09 Forecast September 09 Forecast
2008 2009
2.94 M t (-16.1%) 3.10 M t (+5.4%)
Quarterly Stainless steel production - Japan
950
1 050
June 09 Forecast September 09 Forecast
2008 2009
3.49 M t (-8.1%) 2.51 M t (-28.0%)
utilisation rates nevertheless increased significantly reaching 80-85% at the end of August. Japanese producers are benefiting from the increase in Chinese apparent consumption, as well as an improvement in their own domestic demand.-For India we expect production this year to be similar to that in 2008, at 1.6 MT.
Source: Eramet Ni Research 4
400
500
600
700
800
Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09
' 000
T
-16%
-39%
+20%
+44%
+15% -8%
350
450
550
650
750
850
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
' 000
T
-3%-29%
-39%+31%
+44%
+7%
3
THE STAINLESS STEEL MARKET: PRODUCTION BY ZONE
Europe:- In the 1st half of the year, European mills produced at utilisation rates averaging 50%, due to very low apparent demand.- With the end of the de-stocking process, producers increased output in Q3, despite the summer shut-downs in July & August. In September utilisation rates went up between 75% and nearly 100% depending on the different mills.- For Q4 we have assumed utilisation rates in the region of 80%, which we think is cautious.- For the year, European production will be just below 6 MT, down 23% compared to 2008. Such a decline
NICKEL
2 200
2 400
June 09 Forecast September 09 Forecast2008 2009
Quarterly European Stainless steel production :
7.75 M t (-4.2%)
is unprecedented. (NB: European stainless steel production reached 9.25 MT in 2007).
5. 97 M t (-22.9%)
Source: Eramet Ni Research 5
1 000
1 200
1 400
1 600
1 800
2 000
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
' 000 T
-22%
-21%
-12%+13%
+19% +4%
USA:- As in Europe, US mills operated at very low utilisation rates during the 1st half of the year (below 50%),with very low consumption, following on from de-stocking by the Service Centers.- Q3 should show a significant turnaround (+46% versus Q2) as de-stocking comes to an end. Moreover, the US producers are also benefiting from much lower than usual imports (-56% at the end of April).- We have assumed that production in Q4 will be similar to that in Q3, which is around 80% of the level prior to the crisis.
THE STAINLESS STEEL MARKET: PRODUCTION BY ZONE
NICKEL
600
700
800
June 09 Forecast September 09 Forecast
2008 2009
-5%
1.92 M t (-11.6%)
Quarterly stainless steel production in the USA :
1.70 M t (-11.2%)
Source: Eramet Ni Research 6
200
300
400
500
600
Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09
' 000
T
5%
-23%
-35% +26% -7%
+46% +2%
4
THE STAINLESS STEEL MARKET: QUARTERLY PRODUCTION
After the catastrophic 2nd half of 2008, apparent demand in China recovered more strongly and more quickly than anticipated, enabling Chinese and other Asian producers to significantly increase their production. We believe that a correction will take place in the Chinese market during Q4, which will have repercussions on neighbouring countries.
In Europe and in the US, production remained very low in the 1st half of the year, but with the ending of the de-stocking process, production is on the increase and we have assumed utilisation rates of 80% for Q4.
NICKEL
7 000
8 000
June 09 Forecast September 09 Forecast2008 2009
Quarterly Stainless steel production :
26.0 M t (-7.4%) 24.3 M t (-6.6%)
+12%-4%mainly Asie
Mainly in Europe-USA-Japan Correction in the Chinesemarket
-1%
-18%
Source: Eramet Ni Research 7
4 000
5 000
6 000
Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09
' 000 T
+11%
+19%
-26%
l d i
THE STAINLESS STEEL MARKET: ANNUAL PRODUCTION
After 2007, which was virtually stagnant and 2008 which was down by 7.4%, stainless steel production should reach 24.3 MT this year, a decrease of 6.6%.This decrease is however significantly lower than what was feared a few weeks ago (below 23 MT, a double digit decrease in % compared to 2008).
NICKEL
+17%
-7,3%
+0,7%
Annual stainless steel production :
5
10
' 000
KT
Asia (excluding China)
RoW
EuropeChina
23,7 23,9
28,1
24,326,0
27,9
25
30
35
' 000
kT
Forecast June 09 September 09 Forecast
+1%
+17%-7,4%+0,7%
-6,6%
Source: Eramet Ni Research 8
+8%
+1%
-9,9%
02004 2005 2006 2007 2008 2009 F
21,9 22,8
202003 2004 2005 2006 2007 2008 2009
F
+8%
With 34% of the world’s production, China will become the world’s largest producer of stainless steel in2009, ahead of all the European producers combined and ahead of a combination of Taiwan+Korea+Japan+India.
5
THE STAINLESS STEEL MARKET: STOCK VARIATIONS
From the beginning of the 2nd half of 2008 until the end of the 1st quarter 2009, we estimate a worldwide de-stocking(stainless steel producers, distributors and end users) of more than 2 MT.
Such stock variations are exacerbating the fluctuations in apparent demand, making the downturns and upturns even more pronounced.
In Europe and in the US, we estimate that stainless steel stocks are still at a low level, whereas some re-stocking has already taken place in Asia and particularly in China (stocks at Wuxi and Foshan above the peak of May 2008)
NICKEL Distributor stocks: Foshan et Wuxi(In ‘000 MT)
May 2008)
US distributor stocksSS Monthly inventory - historical data in '000 MT
650
700
750
800
153152
174
164
150
200
foshan total
Wuxi total
Source: Eramet Ni Research 9
200
250
300
350
400
450
500
550
600
650
Dec Ja
nFe
bM
arAp
rM
ay Jun
Jul
Aug
Sept
Oct
Nov
Dec Ja
nFe
bM
arAp
rM
ay Jun
Jul
Aug
Sept
Oct
Nov
Dec Ja
nFe
bM
arAp
rM
ay Jun
Jul
Aug
Sept
Oct
Nov
Dec Ja
nFe
bM
arAp
rM
ay Jun
Jul
Aug
Sept
Oct
Nov
Dec Ja
nFe
bM
arAp
rM
ay Jun
Jul
Aug
Sept
Oct
Nov
Dec Ja
nFe
bM
arAp
rM
ay Jun
Jul
Aug
Sept
Oct
Nov
Dec Ja
nFe
bM
arAp
rM
ay Jun
Jul
Aug
2002 2003 2004 2005 2006 2007 2008 2009
58 57
81
93
123
141
116
111
87
101
111 112
9491 88
99
68 6770
74 73 71
8490
8482
78
95
119123
133125
133129
75
118
120
140
50
100
150
dec 07
janv-08
févr-08
mars-08
avr-08
mai-08
juin-08
juil-08
août-08
sept-08
oct-08
nov-08
déc-08
janv-09
févr-09
mars-09
avr-09
mai-09
juin-09
juil-09
août-09
Based on our different assumptions (production, stocks, flow of imports and exports in the various geographic areas), real worldwide stainless steel consumption is forecast to fall by 10.8% this year, following on from a fall of 2.5% in 2008.Only China will enjoy an increase (6.1%).Excluding China, real worldwide consumption of stainless steel will decline by 18.4% this year, with particularly significant falls in Japan (-27.1%), the US (-25.4%) and Europe (-23.7%).
THE STAINLESS STEEL MARKET: REAL CONSUMPTION
NICKEL2007 2008 2009
Real stainless steel consumptionChinaEuropeUSA
+10.8%+2.1%+0 7%
+6,7%-5,3%11 8%
+6,1%-23,7%25 4%
Source: Eramet Ni Research 10
USAJapanFar East
World
World excluding China
+0.7%-2.0%+6.3%
+5,0%
+2.4%
-11.8%-15.9%+0.5%
-2,5%
-6.2%
-25.4%-27.1%-5.6%
-10.8%
-18.4%
6
NICKEL
2)
NICKEL CONSUMPTION
Source: Eramet Ni Research 11
REAL CONSUMPTION OF NICKEL IN STAINLESS STEEL: STAINLESS STEEL PRODUCTION BY GRADE
- According to our estimates the 300 series will regain 4.1 points in market share compared to last year, to reach 62.5%. This market share is however still significantly lower than the levels at the beginning of the decade.-The market share of the 200 series has stopped growing and has stabilised around 13.5%.The increase in the nickel price could however revive interest in this grade of steel, particularly in China. - The 400 series was the most effected by the crisis..
NICKEL
58,457,7
65,0
63,467,972,7
74,9
62,5
40 0
60,0
80,0%
3 0 0 ser ies( 8 % N i)
Stainless steel production by grade
Source: Eramet Ni Research 12
13,913,311,09,69,05,53,0
13,4
22,1 21,823,1 26,6
24,029,0 27,7
24,1
0,0
20,0
40,0
2002
2003
2004
2005
2006
2007
2008
2009
2 0 0 ser ies( 1- 4 % N i)
4 0 0 ser ies( 0 % N i)
7
REAL CONSUMPTION OF NICKEL IN STAINLESS STEEL: THE SCRAP RATIO
The decline in the scrap ratio has been confirmed this year. We have revised our estimate to 41.2% (from 43.6% in our June publication).
Scrap ratio in stainless steel
NICKEL
47,646,7
46,347,1
46
47
48%
Scrap ratio in stainless steel
Good availability of scrap until Q3 2008 -Scrap generation will be limited, in line with the decline in industrial output.-The countries where the scrap ratio is the highest (USA & Europe) will be those where stainless steel production is expected to fall the most. On the other hand China which has a low ratio, will represent 34% of world production in 2009 (27.3% in 2008)
Source: Eramet Ni Research 13
41,240
41
42
43
44
45
2005
2006
2007
2008
2009
2008).- Some stainless steel producers disposed of their surplus stocks of ferro chrome at the beginning of this year, which has limited their scrap consumption.
950
REAL CONSUMPTION OF NICKEL IN STAINLESS STEEL
Despite the decline in stainless steel production worldwide (-6.6%), the revival in the austenitic share (particularly the 300 series) coupled with the fall in the scrap ratio, has enabled real consumption of primary nickel in stainless steel to increase by 9.7%, compared to the low point in 2008.
Real consumption of nickel in stainless steel
250
juin-09 sept-09
2008 2009
NICKEL
803
732748
820
792
892
690
651683
781
681650
750
850
KT
Secondary Ni
Primary Ni
-11.2%
-7.5%+9.7%
150
200
250
' 000
T -21%
-25%
+22%
+22%
+10%
-9%
Source: Eramet Ni Research 14
563
5502004 2005 2006 2007 2008 2009
Secondary Ni
100Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09
2009:Stainless steel production: -6.6% versus 2008Austenitic share: 75.9%, +3.6 points versus 2008300 series: 62.5%, +4.1 points versus 2008Scrap ratio: 41.2%, -5.9 points versus 2008Consumption of primary nickel in stainless steel: +9.7%
8
REAL CONSUMPTION OF NICKEL IN STAINLESS STEEL
Consumption varies significantly from one area to another: real consumption of primary nickel in stainless steel is expected to grow by more than 35% in China and by more than 30% in the Far East, whereas in Europe we expect it will fall by more than 15%.
NICKEL2007 2008 2009
Real consumption of primary nickel in stainless steelChinaEuropeUSA
+46.7%-26.1%31 8%
-1,2%-1,7%2 0%
+35,5%-16,9%+13 8%
Source: Eramet Ni Research 15
USAJapanFar East
World
-31.8%-9.5%-33.8%
-11,3%
-2.0%-18.5%-14.2%
-7,5%
+13.8%-15.3%+32.1%
+9.7%
REAL CONSUMPTION OF PRIMARY NICKEL (NON STAINLESS STEEL)
The non stainless steel sectors, which held up relatively well in 2008, have now been effected by the crisis, including the nickel alloys sector which relies heavily on investment spending. The plating sector has been particularly badly affected.
2007 2008 2009
Ni alloys 4,3% 5,1% -10,1%
Ferrous metallurgy 5,7% 4,5% -12.1%
NICKEL
162
180
143
164171
127119117
122
150
200Ni alloys
Ferrous
PlatingCoinage
O thers
Plating 6,7% -3,9% -17,6%
Coinage -4,3% -9,1% -7,0%
Others 6,8% -1,1% -9,7%
Total non stainless 5,2% 0,9% -11,8%
Source: Eramet Ni Research 16
104 105 111
84
117 103117
100
25 23 22 20 19
8088 94 93
0
50
100
2005 2006 2007 2008 2009
KT
9
REAL CONSUMPTION OF PRIMARY NICKEL
The non stainless steel sectors, which cushioned the fall in the real consumption of primary nickel in 2007/2008, are having the reverse effect this year.As a consequence real consumption of primary nickel in all sectors is forecast to reach 1,271 kt this year, a modest increase compared to 2008 (+0.7%).
By sector of activity By area
NICKEL
y y
748820
792892803
1236 12181391
1317
1262 1271
900
1200
1500
KT
Inox
total
250
500
'000
MT
EUROPE
CHINA
JAPAN
y
-11.2%
-7.6% +9.7%
-5.3%
-4.2% +0.7%
Source: Eramet Ni Research 17
732
416
530525499
470468
300
600
2004 2005 2006 2007 2008 2009
non inox
02003 2004 2005 2006 2007 2008 2009
KOREA NORTH AMERICA
TAIWAN
INDIA
After stagnating in 2008, China’s real consumption is back with a strong growth rate this year (+21%). With real consumption estimated at 425 kt for this year, China will represent more than 1/3rd of the primary nickel consumed worldwide, to become the largest consumer, ahead of all the European countries combined.
+5.2% +0.9% -11.8%
APPARENT CONSUMPTION OF PRIMARY NICKEL
Chinese imports have been very strong in the first half of the year, reaching extremely high levels in in June & July, out of all proportion to real consumption. Imports went down in August, although remaining at a substantially higher level than the 2008 monthly average (around 14 kt / month). As of the end of August, imports of nickel metal amounted to 188 kt, compared to 118 kt for the whole of 2008. For FeNi, imports at the end of August (46.2 kt) represented 2.8 x that imported in the whole of 2008 (16.3 kt).
NICKEL
Monthly imports of nickel in China (excluding feed for Chinese nickel production)
40
50
60
Ni
2008 2009
Source: Eramet Ni Research 18
0
10
20
30
in t,
net
N
Jan
March
May July
Sept
Nov Jan
March
May July
OthersFeniNi metal
10
With extremely high imports (especially in June/July), apparent consumption in China already exceeds real consumption by 90 kt – 95 kt.Even if there was to be a major slow down in imports for the remainder of the year, Chinese apparent consumption will exceed real consumption by 80 kt. Part of this re-stocking is justified by the need for increased working stocks for the stainless steel mills (about 20 kt). The balance (about 60 kt) can be considered as surplus.
Q1 Q2 Q3 (est) Q4 (est) 2009 (est)
APPARENT CONSUMPTION OF PRIMARY NICKEL
NICKEL
Estimated Chinese real demand
100.4 115.5 111.0 97.8 424.8
Estimated domestic production
50.1 61.4 62.9 59.9 234.3
Imports(excluding feed for domestic production)
52.5 108.0 100.0 42.0 302.5
Source: Eramet Ni Research 19
Exports 1.2 1.4 14.0 15.0 31.6
Estimated Chinese apparent demand
101.4 168.0 148.9 86.9 505.2
Apparent – real(stocking if +, de-stocking if -)
1.0 52.5 37.9 -10.9 80.5
All numbers in kt
APPARENT CONSUMPTION OF PRIMARY NICKEL
In 2008 apparent consumption of primary nickel fell by far more than real consumption (-8.7% vs. -4.2%), as most stainless steel producers reduced their stocks.Contrary to last year, due to the re-stocking taking place in China, apparent consumption of primary nickel should exceed real consumption (+7.3% vs. +0.7%).
NICKEL
2007 2008 2009
Real consumption of primary Ni in SS and non SS
1317 kt-5.3%
1262 kt-4.2%
1271 kt+0.7%
Primary Ni in scrap 4 kt 6 kt 6 kt
Consumers – distributorsstock variations China
+6.5 kt +4 kt +80.5 kt
Source: Eramet Ni Research 20
Consumers – distributorsstock variations rest of the world
+44 kt -20 kt -15 kt
Total apparent consumption of primary Ni
1372 kt-0.7%
1252 kt-8.7%
1342.5 kt+7.3%
11
APPARENT/ REAL CONSUMPTION OF PRIMARY NICKEL
1 450
NICKEL
1 250
1 350
1 450
'000
MT
Real consumption
Apparent consumption
Source: Eramet Ni Research 21
1 1502004 2005 2006 2007 2008 2009
NICKEL
3)
NICKEL SUPPLY
Source: Eramet Ni Research 22
12
NICKEL PRODUCTION IN 2009According to our latest estimates, refined nickel production this year will fall by about 5.4%, to 1,302.2 kt (1376.5 kt in 2008, -74.3 kt).We have assumed that the strike at Vale Inco’s Canadian operations be over by the end of Q3, which is very uncertain.
Compared to 2008, only POSCO-SMSP and BHP+Yabulu will contribute significant additional tonnage.
1934
-75 -65 -55 -45 -35 -25 -15 -5 5 15 25 35
B HP + Ya bul u
kt
NICKEL
g
In the case of BHP, 20 kt were lost in 2008 between the maintenance shutdown at Kalgoorlie in Q3, and the strike at Cerro in Q1.
We have significantly revised upwards our estimate of the NPI-NBF production, to 75 kt for 2009, from 48 kt in our previous Nickel Outlook.
Vale Inco’s output is severely affected by the combination of the maintenance shutdowns made in Q2 and by the strike at Sudbury / Voisey’s Bay, which has been ongoing since July We have assumed that the-2
-2-1
11123
78
19
-1
Ya k i n
Nor i l sk + H a r j a v a l t a
Our a l / Ot he r R ussi a
I mpa l a
Er a me t
M ina r a
S he r r i t t
P a mc o
A ngl o
NP I - NB F
Ot he r Chine se
P osc o
Source: Eramet Ni Research 23
been ongoing since July. We have assumed that the strike will be over at the end of September, for which there is a large degree of uncertainty.
Xstrata will lose 19 kt with the stoppage of Falcondo.
Eramet is scheduled to produce 52 kt instead of the initially planned 62 kt.
-6-5-5-3-3-3
-62 -22-8-7
Va l e I nc o
Xst r a t a
P obuz k he
S M M
Bi ndur a
La r c o
C uba
A nt a m
Vot or a nt i m
J inc hua n
Nickel production increased again slightly in Q2, stimulated by the increase in nickel prices. Supplies of nickel should decrease in Q3, due to Vale Inco’s reduced output.We have assumed that that the strike will be over at the end of September. If however the strike continues, the impact will be around 10 kt/m.
NICKEL PRODUCTION IN 2009
NICKEL
360347
336 334
315
331
312
344
300
325
350
375
400
00 T
2008 2009
Quarterly refined nickel production (in kt)
Source: Eramet Ni Research 24
200
225
250
275
300
Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09
' 000
13
With energy (coke & electricity) prices and freight rates still at low levels, the rally in nickel prices has enabled NPI-NBF producers to become profitable again and ore imports have picked up significantly in June and July (1.7 MT &2.2 MT respectively). It seems that some stock build-up has occurred there too (stocks at ports are currentlyestimated at 9.7 MT, up from 7.6 MT in June).The current production costs of NPI 5% (produced in blast furnaces) are estimated at around $7.00/lb ($15,400/t),while those of NBF 10% (produced in electric furnaces) are estimated at around $6.50/lb ($14,300/t).We have therefore significantly up-graded our forecast for NPI-NBF production, from 48 kt in our previous forecast,to 75 kt.
NICKEL PRODUCTION IN 2009
NICKEL
Chinese imports of Ni ore
1500
2000
kt Ni ore import
Phil ippines
Indonesia
New Caledonia
200920082007 30
1820
2320
20
30
40
00 T
Estimates of quarterly NPI-NBF production
2006
Source: Eramet Ni Research 25
0
500
1000
Jan
Mar
May
July
Sept
Nov jan
Mar
May
July
Sept
Nov
Janv
Mar
May
July
Sept
Nov Jan
Mar
Mai
July
18
128
12
0
10
20
Q1-08
Q2-08
Q3-08
Q4-08
Q1-09
Q2-09
Q3-09
Q4-09
' 00
NICKEL
4)
THE SUPPLY / DEMAND BALANCE
Source: Eramet Ni Research 26
14
2008 Q1 Q2 Q3 Q4 TOTAL
THE SUPPLY / DEMAND BALANCEOn top of the recovery in real demand, the very high levels of Chinese imports in Q’s 2 &3 are boosting apparent demand and the market is turning into relatively significant deficits for these 2 quarters, following a large surplus in Q1.For Q4 we have assumed a restart of Vale Inco’s Canadian operations, at the end of September.LME stocks remained fairly stable in Q’s 2 & 3, but we believe that nickel producer stocks decreased substantially, reverting to their pre-crisis levels. Part of their excess stocks has been transferred to China.
NICKEL
2008 Q1 Q2 Q3 Q4 TOTAL2009
World supply 1 376.5 315.0 330.7 312.4 344.2 1 302.2
World real consumption 1 262.7 280.8 319.6 343.3 327.5 1271.2
World apparent consumption 1 252.4 272.7 367.9 380.2 321.6 1 332.4
Source: Eramet Ni Research 27
BALANCE +124.1 +42.3 -37.2 -67.8 +22.6 -40.2
LME Stocks 78.8 107.8 109.6 118 115 +36.2
Ni producer stocks 287.0 300.3 261.3 185.1 210.7 -76.4
LME + prod stocks, in weeks of cons. 19.3 19.5 13.1 10.4 13.3 13.3
THE SUPPLY / DEMAND BALANCEBased on our assumptions, the market will be in deficit in 2009, by about 40 kt. However if the surplus Chinese stocks were to be “re-injected” into the balance, the market would be in a slight surplus (about +20 kt).
NICKEL
1
23
4232
30
58
85
33
051015202530354045505560657075808590
KT
20092007 2008
19,519,320
25
nsum
ptio
n
LME + Ni producer stocks
2007 2008 2009
Supply / Demand by quarter Stocks by quarter
-40 KT+61 KT +124 KT
Source: Eramet Ni Research 28
-9
-68
-37
-90-85-80-75-70-65-60-55-50-45-40-35-30-25-20-15-10-505
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
K
13,110,4
13,312,1
9,48,89,68,6
6,66,1
5
10
15
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
in w
eeks
of c
on
15
THE SUPPLY / DEMAND BALANCE
According to our scenario, LME and nickel producer stocks should be close to the bar of 10 weeks of consumption at the end of Q3.
Stocks in weeks of Average annual
NICKEL
10
15
20
10
15
20
consumption(LME + producer stocks)
gprices in $/lb(Settlement)
Source: Eramet Ni Research 29
0
5
10
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
2009endofQ3
0
5
10Current price
QUESTIONS FOR DEBATE
The Chinese nickel restocking:Opportunistic or strategic ?Whom do these stocks really belong ?How long to digest those surplus stocks ?On the domestic market or through exports ?
NICKEL
On the domestic market or through exports ?
The nickel pig iron production: what level ?
Can Europe / USA / Japan make it up for the expected slowdown of Chinese imports ?
Length of the VALE INCO strike ?
Source: Eramet Ni Research 30
2010: what scenario for stainless steel production ?Non stainless steel sectors: what can we expect ?