Bloomberg News

Norilsk Says Nickel, Palladium Prices Rising on Investor Demand

February 14, 2012

Feb. 13 (Bloomberg) -- OAO GMK Norilsk Nickel, the world’s largest producer of nickel and palladium, sees metals prices rising this quarter as investment demand rebounds, according to Anton Berlin, head of marketing.

Norilsk Nickel has booked sales for several weeks ahead, Berlin said in an interview in Moscow. “Our order book was as long as half-a-year when nickel prices peaked in 2007 and as short as one week in the 2008 crisis,” he said. “Now it’s somewhere in the middle.”

Customers are buying on short-term contracts rather than long-term, reflecting uncertainty in their own sales in the future, Berlin said. The nickel market is balanced this year, and price movements will largely depend upon fluctuations in investors’ positions, rather than changes in industrial demand, according to Berlin.

Norilsk plans to increase nickel production at mines in Africa and Australia this year after prices recovered from a slump to as low as $9,050 a ton in 2008. The metal used in stainless steel has gained more than 12 percent so far this year, trading at $21,010 today on the London Metal Exchange. The Russian company said Jan. 30 it may boost total nickel output as much as 3.4 percent this year, after forecasting 2012 capital spending of $3 billion.

Palladium sales by the Russian government won’t lower prices, Berlin said. The state may sell as much as 4.5 metric tons of palladium a year in 2012 and 2013, RBC Daily reported Oct. 14. This is less than 2 percent of global supply, which isn’t sufficient to affect the market, he said.

A 19 percent decline in Russian nickel exports last year while production levels remained little changed is most likely a “glitch” in official statistics, Berlin said. The country has no significant stockpiles of the metal set aside for future sales, he said.

--Editors: Torrey Clark, John Viljoen

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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