Russia may cut nickel exports

By Staff -- Purchasing, 9/7/2000

Russia may scale down nickel exports in the second half of the year in an effort to prop spot-market prices, says analyst Jim Lennon Macquarie Equities in London.

Russian producer Norlisk Nickel exported 195,000 tonnes of nickel in 1999, out of total Russian exports of around 210,000 tonnes. In the first half, Russian imports were 122,000 tonnes, 16% higher. But Norlisk now is planning to export a total of 10%-15% less for the year, which would bring all of Russia's second-half exports to just 56,000 tonnes.

Lennon points out that no nickel exports are planned from Dudinka port in July and August. That's because the Russian Mint has been awarded a contract to manufacture Indian rupees and has bought 4,000 tonnes of nickel from Norilsk for third- and fourth-quarter delivery, compared with less than 1,000 tonnes purchased all of last year.

Lennon suggests that "lower Russian nickel exports would severely impact the nickel market during the second half because of the relatively high exports in the first half."

From a cyclical low of $1.76/lb in October of 1998, London Metal Exchange (LME) cash nickel peaked in March 2000, at $4.67. The mid-August price had slipped to an average $3.42/lb "but there could be a major impact from such a change as Norlisk abandoning second-half supply."

Norilsk is said to be planning a major switch of exports toward a 25% increase in copper exports during the second half of 2000, says Lennon. Norlisk exported 380,000 tonnes of copper last year, but domestic demand is softer than in 1999.