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Saturday, 20 March 2010
China monetary tightening won’t crimp metals - SocGen
Monetary tightening in China, the world’s largest metals user, will have little impact on consumption and the country will continue to drive metals demand for years, David Wilson of Societe Generale said on Friday.
China monetary tightening won’t crimp metals -SocGen
* Nickel prices to average $22,800 a tonne this year
* Stimulus spending in China will remain strong
* Supply-side growth in nickel under pressure
By Maytaal Angel 19 March 2010
Monetary tightening in China, the world’s largest metals user, will have little impact on consumption and the country will continue to drive metals demand for years, David Wilson of Societe Generale said on Friday.
“We really believe it is not an issue in terms of metals consumption. Last year ... that huge surge in bank lending, a lot of it wasn’t spent,” said Wilson, speaking at the 2nd Annual Euro Nickel Conference in London.
“It means tightening now will have very little impact in terms of corporate behaviour.”
Base metals prices have struggled to gain traction this year, weighed down in large part by concerns over monetary tightening in China, which was key in driving prices last year due to record imports.
On Friday, nickel traded down at $22,450 a tonne at 1648 GMT, versus $22,760 at the close on Thursday, under pressure from a stronger dollar and lingering concerns over tightening in China.
But according to Wilson, the concerns are misplaced, as are worries over cut-backs in economic stimulus packages in China.
“The percentage of money being spent compared to what was planned is low, we expect more spending going forward. We think the money being spent is greater than the 4 trillion announced because a lot of regional projects are back in play.”
Nickel prices have risen by around 20 percent this year, making them the best performing LME metal.
On the supply side, a strike in Canada, delays in bringing the New Caledonia Goro mine into production and most recently, a problem at BHP Billiton’s Nickel West operation in Kwinana, Australia, have helped lift prices.
“There’s a lot of scepticism on the supply outlook for nickel. There was an expectation over a year ago for a surge in supply, but this hasn’t happened, the supply side is struggling,” said Wilson.
On the demand side, a rise in stainless steel production, which accounts for roughly two thirds of nickel consumption, has helped drive prices, as have strong investment flows into commodities.
“Total assets under management in commodities at the end of 2009 was close to $260 billion, so investors do have a huge impact in the metals sphere, you cannot just rely on fundamentals,” said Wilson.
Societe Generale expects LME cash nickel prices to average $22,800 a tonne this year, compared to $14,721 a tonne last year. In January, a Reuters poll of 57 analysts called for average nickel prices of $18,185 a tonne this year.
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China monetary tightening won’t crimp metals -SocGen
* Nickel prices to average $22,800 a tonne this year
* Stimulus spending in China will remain strong
* Supply-side growth in nickel under pressure
By Maytaal Angel
19 March 2010
Monetary tightening in China, the world’s largest metals user, will have little impact on consumption and the country will continue to drive metals demand for years, David Wilson of Societe Generale said on Friday.
“We really believe it is not an issue in terms of metals consumption. Last year ... that huge surge in bank lending, a lot of it wasn’t spent,” said Wilson, speaking at the 2nd Annual Euro Nickel Conference in London.
“It means tightening now will have very little impact in terms of corporate behaviour.”
Base metals prices have struggled to gain traction this year, weighed down in large part by concerns over monetary tightening in China, which was key in driving prices last year due to record imports.
On Friday, nickel traded down at $22,450 a tonne at 1648 GMT, versus $22,760 at the close on Thursday, under pressure from a stronger dollar and lingering concerns over tightening in China.
But according to Wilson, the concerns are misplaced, as are worries over cut-backs in economic stimulus packages in China.
“The percentage of money being spent compared to what was planned is low, we expect more spending going forward. We think the money being spent is greater than the 4 trillion announced because a lot of regional projects are back in play.”
Nickel prices have risen by around 20 percent this year, making them the best performing LME metal.
On the supply side, a strike in Canada, delays in bringing the New Caledonia Goro mine into production and most recently, a problem at BHP Billiton’s Nickel West operation in Kwinana, Australia, have helped lift prices.
“There’s a lot of scepticism on the supply outlook for nickel. There was an expectation over a year ago for a surge in supply, but this hasn’t happened, the supply side is struggling,” said Wilson.
On the demand side, a rise in stainless steel production, which accounts for roughly two thirds of nickel consumption, has helped drive prices, as have strong investment flows into commodities.
“Total assets under management in commodities at the end of 2009 was close to $260 billion, so investors do have a huge impact in the metals sphere, you cannot just rely on fundamentals,” said Wilson.
Societe Generale expects LME cash nickel prices to average $22,800 a tonne this year, compared to $14,721 a tonne last year. In January, a Reuters poll of 57 analysts called for average nickel prices of $18,185 a tonne this year.
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