Cutbacks

Figures from the International Stainless Steel Forum (ISSF) show that preliminary global stainless steel production for the fourth quarter of 2008, slumped by 30 percent year-on-year to 4.84 million tonnes. The knock-on effect is that demand for nickel has fallen by about 20 percent since the end of last year and producers have cut production by between 20 to 30 percent, Barnett said.

In a sign of the times, Ufaleynickel, Russia‘s third-largest nickel producer, said last month that it had shut down a furnace and could halt output altogether if lack of demand caused by the financial crisis continued. “Clearly in the current climate, there is a huge issue with demand,” said Barnett said. “Despite the downturn, it is still the case that the stainless steel industry is the only metal that is growing at the same rate as the plastics industry.”

And although unable to give an idea as to when the Institute’s members see any economic upturn and subsequent rise in nickel prices, Barnett saw China as crucial. “Industrial production... the driver of nickel demand of the last few years has been China and Asia,” Barnett said. “When those resume growth, you’ll see huge demand in nickel.”

Greener environmental policies from governments will also eventually boost nickel demand, Barnett added, with wind turbines, nuclear power plants and hybrid vehicles all using the metal. “Because of what it’s used for and if you look at the stimulus packages, I would not be surprised if we saw a (nickel) turn-up early in the (metals) cycle rather than late.”

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