Nickel demand up 3-4%, but 30% of world output unprofitable - Norilsk Nickel
MOSCOW. Sept 18 (Interfax) - World copper and nickel demand grew 3%-4% in January-August, Yury Sobolyev, head of the sales department at MMC Norilsk Nickel , told Interfax.
Norilsk Nickel, the world's biggest nickel producer with 18% of the market, forecast at the start of the year that world demand for nickel and copper would grow 1%-2% in 2012. Palladium demand rose 5%, as expected, in the 8M, Sobolyev said.
But "at current prices of around $16,000 a tonne around 30% of world nickel output is unprofitable," he said.
Nickel did not climb above $16,000/tonne on the LME between the beginning of July and September 14. It traded at $17,880 on Tuesday, down 10% from the January average of $19,820 and 22% below the 2011 average of $22,830.
Norilsk Nickel has said it is prepared to curtail operating and investment spending in 2012 if nickel falls below $15,000 a tonne. Sobolyev said 45% of world nickel production would be unprofitable at $15,000 a tonne. "This doesn't mean production would be halted there and then. The price itself doesn't matter so much, what maters is how long that price holds," he said.
Norilsk Nickel is not expecting any abrupt changes in nickel prices before the end of the year. "The world economy is expected to pick up in 2013, and metal prices ought to recover," Sobolyev said.
He said Norilsk Nickel had budgeted for various market development scenarios, and that the investment program would be implemented more slowly at lower prices.
Bu he said Norilsk Nickel, with some of the lowest unit costs in the industry, "would be the last to make losses." "We'd be the last off the market," he said.
World nickel consumption grew 8% and supply rose 12% in 2011. Output of 1.62 million tonnes was similar to consumption of 1.615 million tonnes. Surplus demand for nickel, or the accumulation of investment stocks, which resulted in a small shortage on the market was an estimated 45,000 tonnes.