15/04/2009 - 22:00

Nickel stocks find some friends

15/04/2009 - 22:00

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MARKET sentiment surrounding nickel appears to be on the rise translating to higher shares prices for Western Australia's nickel miners, but it's too early to call a turnaround for the base metal.

MARKET sentiment surrounding nickel appears to be on the rise translating to higher shares prices for Western Australia's nickel miners, but it's too early to call a turnaround for the base metal.

During the past month, the price of nickel on the London Metal Exchange (LME) has risen from about $US9,500 per tonne to $US10,755/t at the time WA Business News went to press.

While the price increase is minimal compared to the leaps the base metal took two years ago - when it reached historic highs of $US53,000/t - it has spurred investor confidence in some WA nickel stocks, which have had to downsize or halt operations due to the sharply lower price.

Minara Resources, which operates the Murrin Murrin mine, has been the standout performer out of the WA nickel players, receiving two speeding tickets from the Australian Securities Exchange for its share price surge.

During the past month, the miner's share price soared 130 per cent from 26 cents to 60 cents on no significant news.

In its reply to the ASX price queries, Minara said it was not aware of any information concerning the company that could have boosted the share price but did point to the rising nickel price.

Other mid-cap miners in WA have also had substantial share price rises during the past month.

Shares in Panoramic Resources have jumped 61 per cent to $1.36, Mincor Resources gained 49 per cent to last trade at 96 cents, while Independence Group, which operates the Long nickel mine in WA, has risen 50 per cent to $3.35.

Independence has also benefited from its exposure to gold through its joint venture over the sizeable Tropicana gold deposit.

Western Areas shares have climbed more than 9 per cent to $3.81.

ANZ commodities analyst Mark Pervan called the pickup in the nickel market a "mild rebound" and said there was still a fair bit of cautiousness given the base metal is highly leveraged to steel output, which has slumped 40 per cent year-on-year.

He said the market may be taking its short-term cue from a rise in cancelled warrants, which effectively means the nickel buyer has indicated it will take delivery of the metal in the near-term.

COPPER

NICKEL is not the only commodity experiencing a surge, with bellwether copper leading the base metal charge with its jump from $US3,700/t a month ago to just over $US4,500.

WA copper miner Aditya Birla's share price has skyrocketed 267 per cent to 44 cents while Straits Resources, which operates the Whim Creek copper mine, climbed 49 per cent to last trade at $1.45.

"The situation with copper is that the Chinese strategically need more copper than nickel," Mr Pervan said.

"Copper is a key ingredient in the power industry which is very much an area of growth for China, which doesn't mine the metal."

Despite the pick up in demand for the red metal, Mr Pervan has forecast a pull back in the copper price in the September quarter and has forecast the metal's price to be in the high $US3,000 at the end of calendar 2009.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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