US investors are protected from nickel shot


There's some good news for ordinary retail investor in the United States. Comes the bubble, and at one time Joe Investor will not miss the boom and crash. Two main stories create the potential for short-term meteoric rise in prices only to quickly fall as macroeconomic forces and political issues at first. In a world full of financial instruments, the world's stock exchanges and products derived from the conditions out & # 39; I am to technological indices k ^ & # 39; yuchersav silkworm, nickel base metal inaccessible to the ordinary American retail trader.

Ten years ago, nickel was trading around 11,200 dollars per tonne on the London Metal Exchange (LME). Currently, the market is about 18 500 per ton. Rising prices of almost 65% with & # 39 is a great correlation with the growth of world GDP of the world's five largest economies in the same period of time. In principle, this makes sense, since nickel is used in almost 3000 alloys that we face daily. The rapid rise in nickel prices this year is not associated with the growth of the world, but nickel collapse after the jump will be directly linked to the slowdown in the world's GDP.

Currently, there are two main factors that push nickel prices above fundamental value. The first number is not surprised. In January, Indonesia, the second-largest producer of nickel, has put restrictions on the export of crude ore. The act is designed to encourage the processing of Indonesian ore and increasing domestic industrial development. Some concessions were made to companies with new domestic projects that were already in the works such as Freeport-McMoRan, however, even their production is likely to be reduced by half in accordance with the report on income in the first quarter. In the end, the world can observe supply decline of more than 8% in 2014 due to the adoption of Indonesian politics.

The second factor, which is currently pushing the nickel price higher than their own value – is the escalation of the political crisis in Ukraine. Russia produces about 16% of the world's nickel. It also produces nickel with a significant advantage in comparison with Indonesia at the expense of the geological formations in which it is stored. Norilsk dominates in the Russian production of nickel. Norilsk Nickel, like Gazprom – is kvazipramyslovy concern, get shortlisted for the next round of NATO sanctions, as well as direct US sanctions, which are aimed at individual Russian companies and owners, especially through the banking and tax control.

These problems with short-term supply of fly to the macroeconomic picture, which continues to design a global slowdown. The Organization for Economic Cooperation and Development recently released its predictions with the requirement to reduce global GDP from 3.6% to 3.4%. It is also the second projected decline in six months. Highlights include Chinese GDP decrease from 8.2% to 7.4%. This factor can not be reduced to a minimum, given the fivefold increase in the Chinese economy over the past 10 years, resulting in increase in nickel prices by 50% over the same period. Ironically, the very Chinese production will reduce the metal factor, as is supposed, they will increase production by almost 50%, which will allow to reach almost 500 000 tonnes of common & # 39; output of 1.85 million tons in 2014. Finally, the production efficiency will allow them to make a profit, even if the nickel is below 12,000 dollars per ton.

F & # 39; yuchersnyya markets based on delivery of the product at a given time at a price agreed between the buyer and the seller of the product at the time of conclusion of the contract. Physical products are also storage costs with insurance to cover the cost for storage. This creates the pricing structure, where the longest delivery times have the highest rates of related payments. Such pricing structure called reverse. The opposite of this with a & # 39 is "kontandgo". Contango occurs when prices in neighboring areas exceed the price for a long time. Such pricing structure is a short-term shortage of supply.

nickel market is currently in varying degrees in accordance with kontandgo LME diagrams. Currently, nickel for delivery is currently trading around $ 18 450 per ton, and nickel for delivery in slightly higher trading at $ 18 for three months, 520. Meanwhile, nickel for delivery in December was 18,205 dollars, and nickel for delivery in December 2015 to nearly $ 17 805. These prices make it easy to understand that a short-term jump in prices does not reflect the market perspective on the big picture. In addition, the absence of the US retail investors access to the LME difficult to trade on the stock exchange them.

We have seen that the supply disruptions create a similar situation here in the US. Typically, excess pricing between its own value and increased market value caused by speculation in the media that flow ultimately to the individual retail investor in Main St USA. Unfortunately, we have seen again and again how small traders jump on the newswire, hoping to make a quick buck only as a result, lost the ship as soon as the market develop. These samples are easy to spot on the f & # 39; yuchersnyh US markets due to report on the obligations of traders, which is published weekly by the Commission on Trade in Goods. The report traces the actual buying and selling of individual groups of traders – commercial, index and small speculators. We monitor these reports religiously and use them to inform us of the current forecast of the main industry in the relevant markets. At least this time the nickel bubbles are filled with American summer holidays.