Nickel and copper outlook

The price of nickel has been rising recently in response to increased demand from China, which is the world’s largest consumer of the metal.

The country’s demand for nickel, which is used in the production of stainless steel, increased 35% in the seven months to the end of July 2007 and Jinchuan Group, Asia’s largest nickel producer, has raised its price for a second time this month.

Growth in the Chinese market is currently offsetting a fall in demand from Western Europe and other Asian countries, where the steel industry is cutting back production.

Turning to the outlook for copper, miners at Southern Copper’s operations in Peru are in the process of voting on whether to strike, after failing to reach an agreement on wage increases.

The 19% increase in copper prices seen so far this year has been spurred on by industrial action that has cut output in Peru, Chile and Mexico.

Contract staff working for Codelco, the Chilean state-owned group that is also the world’s biggest copper producer, returned to work at the beginning of August after a five-week strike.

In addition, workers at three of Southern Copper’s mines in Mexico have been on strike since the end of July.