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Professionals Fyson & Associates

96 Brookman Street Kalgoorlie

08 9080 9200

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Have we reached the bottom of the Nickel price cycle?

15 Dec 2015 Kalgoorlie 0 Comment

We spend time daily monitoring the international commodity markets as they ultimately determine the direction of our local economy as the Eastern Goldfields is a major producer of minerals on a global scale.

For the best part of the last decade the Goldfields has been in the shadow of the Pilbara which depleted our labour supply and increased the regions business costs!

At the same time global production of many minerals outstripped demand as the consumption of manufactured goods, out of China in particular, by the US and Europe dropped back following the GFC in 2008.

The main metals that affect Kalgoorlie Boulder are Nickel and Gold.

With the fall of the $AUD against the $US our production costs have, relatively speaking, been buffered against the price falls in $US.

Gold, for example, is running at around US$1075 per Oz which in $AUD is around $1500.

With most producer’s costs at around or less than $A1000 per Oz our gold mines are profitable and the gold industry is in good shape and expanding.

However, Nickel is still sitting at less than 1/3 of its 2010 price in $US.

Nickel metal stocks on the London Metals Exchange (LME) rose steadily from less than 100,000 tons in 2010 to 475,000 tons by the end of May 2015.

Since then the LME stockpile has been falling quite fast, it has dropped 80,000 tons in six months and continues to fall at about 12,000 tons per month.

This suggests that price recovery is imminent!

Most nickel producers are in the red and have cut back production so they all need a price rise to reactivate their mines.

The regions nickel industry from Laverton to Forrestania and all points in between is well poised to capitalise on a price recovery but so far there is little sign that this is occurring with nickel stuck at under US$4 per Lb although it is $0.125 above its low point!!

Watch this space as we monitor the LME where we expect to pick the start of the up-trend leading to a recovery in our overall market.



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