commodities

COMMODITIES

METAL PERSPECTIVE

January 20, 2012

US jobless claims dropped to nearly four year low to 352K in last week with inflation numbers also cooled. Whereas ECB expected Euro crisis to end in the upcoming year expected better year ahead whereas Hungary bowed down to the political pressure and agreed to take steps to tame the crisis.

Bullion desk witnessed correction for the first time in last three days on the back of fewer Jobless claims as well as better Philadelphia Fed Indicators. Gold declined from the 5 week high indicating the failure to break $1670 whereas Silver traded in the choppy range as better economic indicators indicated higher industrial demand. Considering the current optimism at the European Front it is expected that bullion desk may witness certain profit booking. Hence, buy on dips should be strategy.

Base metals prices witnessed positive movements yesterday as strong demand at European bond auctions lessened euro zone debt concerns amid positive US data spurred the sentiments. However, negative US housing numbers kept check on prices. LME Copper rose to nearly four month low above $8,400/t with other metals Lead reached to $2,175/t, Zinc at $2,023/t while nickel rose by more than 3 percent above $20,000/t on LME. Overall, for the short-term base metals are expected hold their earlier gains, if there is any correction in prices then it would be buying opportunity.

Crude oil futures traded down fell to $100.40 on bearish gasoline inventory data pressured by low fuel demand despite decline in crude oil stockpiles. The EIA reported gasoline consumption fell by 2.2% to 8 mb to the lowest since Sept 2001. The poor inflation and job market data from US also pressured oil prices to trade down. We expect oil prices to trade side ways to up for the day supported by stronger Euro and with positive technicals as prices have hold strength near $99.50 eyeing crucial support. NYMEX Crude Oil has resistance at $102.50, and prices have to suatance above this to continue its bull run with support at $99.

AGRI PERSPECTIVE
January 23, 2012
On Friday, Pepper prices settled down by 0.65 percent to Rs.31910 due to profit booking despite buying at lower level in the future market and Indian Cumin Seed slumped and settled down by 0.50 percent to Rs. 15850 due to higher arrivals in the spot market. In Oilseed Complex, Soyabean prices recovered its early losses by 0.58 percent to Rs.2509 due to short covering and unfavorable weather in South Africa. In other side, Both Guarseed and guargum settled up by 2.81 percent to Rs.11258 and 3.18 percent to Rs. 37400 respectively due to strong demand and tight supply in the spot market. While NCDEX Chana prices settled choppy at Rs.3194 due to stride steady arrivals and a marginal improvement in the area under the rabi pulses crop. China could become the world's top sugar importer by 2020, buying 4 million to 5 million metric tons a year, if its per capita consumption grows 4.4% annually this decade, Commonwealth Bank of Australia forecast. In the first 11 months of 2011, China imported 2.42 million tons, up 48%, data from the Hong Kong-based China Customs Statistics Information Center showed last month. China's annual per capita sugar demand is just around 7.6 kilograms, the CBA said in an industry note, citing FAO data. It could rise to 12.6 kg by 2020 and 20.0 kg by 2030. Total consumption could post a 63% gain in the 2010-2020 period, it said.

General Details Of Metals

Gold is the oldest precious metal known to man and for thousands of years it has been valued as a global currency, a commodity, an investment and simply an object of beauty.

Major Characteristics

Gold is unique as it is both a commodity and a monetary asset.
Its stability and high value makes it virtually indestructible and ensures that it is almost always recovered and recycled.
There is no true consumption of gold in the economic sense as the stock of gold remains essentially constant while ownership shifts from one party to another.
Although gold mine production is relatively inelastic, recycled gold (or scrap) ensures there is a potential source of easily traded supply when needed, and this helps to stabilise gold price.
Economic forces that determine the price of gold are different from, and in many cases opposed to the forces that influence most financial assets.

Global Supply Demand Scenario

The total above ground stocks of gold is estimated to be around 1,63,000 tonnes by Gold Fields Minerals Services (GFMS) as on end of 2008
Out of this total stock, 51% is estimated to be present as jewellery, 18% as official reserves, 17% held as investment, 12% used for industrial purposes and 2% is unaccounted for.
Jewellery accounts for almost two-thirds of annual gold demand with investment and industry being the other main drivers. The total annual global demand for gold has averaged 3530 tonnes in the last three years (2005 - 2008). However, it is expected to dip slightly in 2009, owing to the sharp rise in prices.
Five countries, viz., India, China, USA, Turkey, Saudi Arabia and UAE account for above 60% of gold demand, with each market driven by a different set of socio-economic and cultural factors.
The total global mine production is relatively stable, averaging approximately 2,455 tonnes per year over the last three years. Recycling of old gold scrap and official sector sales are the other major sources of supply, which have averaged 1084 tonnes and 378 tonnes in the last three years.
South Africa has been a major gold producer since 1880s and it is estimated that about 50% of all gold ever produced has come from this nation. While, during the early 1980's it produced about 1000 tonnes, the output in 2007 dropped to just 272 tonnes.
China with a production of 276 tonnes, overtook South Africa as the world's largest gold producer in 2007 for the first time since 1905 that South Africa has not been the largest. The other major producers are USA, Australia, Russia and Peru.

World Gold Markets

OTC markets at London (LBMA), New York and Zurich
Gold derivative exchanges at New York – CME (COMEX), Tokyo (TOCOM), Mumbai (MCX)
Istanbul, Dubai, Hong Kong and Singapore are doorways to important consuming regions

India in World Gold Industry

(Rounded Figures) India (In Tons) World (In Tons) % Share

(Rounded Figures)	India (In Tons)	World (In Tons)	% Share
Total Stocks	15000	160000	9
Central Bank holding	558	30,100	2
Annual Production	3	2450	0
Annual Recycling	250	1100	23
Annual Demand	700	3550	20
Annual Imports	600	---	---
Annual Exports	60	---	---

Indian Gold Market

India is the world's largest consumer of gold. Indians normally buy about 25 per cent of the world's gold, purchasing around 700 - 750 tonnes of gold every year.
However, the sharp price increase in 2008 and 2009 has impacted demand with total demand in 2008 dipping to 660 tonnes. It is further expected to shrink in 2009 with demand in first three quarters of 2009 totaling only around 265 tonnes against 553.5 tonnes in the same period of the previous year.
As India's domestic primary production of gold is very less, at around 2-3 tonnes a year, the country imports most of its domestic requirement.
Thus, India is also the largest importer of the yellow metal and has averaged imports of around 600 tonnes a year. However, 2008 imports dipped to around 400 tonnes of gold and it is further expected to dip to around 200-220 tonnes in 2009 owing to high prices.
India's gold demand is firmly embedded in cultural and religious traditions. It is also valued in India as a savings and investment vehicle and is the second preferred investment after bank deposits.
Gold hoarding tendency is well engrained in the Indian society and unofficial stocks held by Indians is estimated to be well above 15,000 tonnes, which is around 9% of the total global gold stocks.
Domestic consumption is dictated by monsoon, harvest and marriage season. Indian jewellery offtake is sensitive to price increases and even more so to volatility.
In the cities gold is facing competition from the stock market and a wide range of consumer goods.
Facilities for refining, assaying, making them into standard bars, coins in India, as compared to the rest of the world, are insignificant, both qualitatively and quantitatively.
In July 1997 the RBI authorized the commercial banks to import gold for sale or loan to jewellers and exporters. At present, 13 banks are active in the import of gold. This reduced the disparity between international and domestic prices of gold from 57 percent during 1986 to 1991 to 8.5 percent in 2001.

Market Moving Factors

Indian gold prices are highly correlated with international prices. However, the fluctuations in the INR-US Dollar impact domestic gold prices and have to be closely followed.
The global prices are driven by a host of factors with macro-economic factors like strength of the economy, rising importance of emerging markets, currency movements, interest rates being major influencing factors.
Supply-demand is a major influencer, amid rising global investor demand and almost stable supplies.
Shifts in official gold reserves, reports of sales/purchases by central banks act as major price influencing factors, whenever such reports surface.
The investment in gold is influenced by comparative returns from other markets like stock markets, real estate other commodities like crude oil.
Domestically, demand and consequently prices to some extent are influenced by seasonal factors like marriages. The rural demand is influenced by monsoon, agricultural output and health of the rural economy.

Measurement

Weight Conversion Table

To Convert from	To	Multiply by
Troy Ounce	Grams	31.1035
Grams	Troy Ounce	0.0321507
Kilograms	Troy Ounce	32.1507
Kilograms	Tolas	85.755

Purity

Gold purity is measured in terms of karats and fineness
Karat: Pure gold is defined as 24 karat
Fineness: Parts per thousan
Thus, 18 karat = (18/24)th of 1000 parts = 750 fineness

Silver

General Characteristics

Silver's unique properties make it a very useful 'Industrial Commodity', despite it being classed as a precious metal.
Demand for silver is built on three main pillars; industrial uses, photography and Jewellery & silverware accounting for 342, 205 and 259 million ounces respectively in 2002.
Just over half of mined silver comes from Mexico, Peru and United States, respectively, the first, second and fourth largest producing countries. The third largest is Australia.
Primary mines produce about 27 percent of world silver, while around 73 percent comes as a by-product of gold, copper, lead, and zinc mining.
The price of silver is not only a function of its primary output but more a function of the price of other metals also, as world mine production is more a function of the prices of other metals.
The tie between silver and economic activity is strong, given that around two-thirds of total silver fabrication is in the industrial and photographic sectors.
Often a faster growth in demand against supply leads to drop in stocks with government and investors.
Economically viable primary silver mine is a function of the world silver price level.

World Silver Supply from Above-ground Stocks

Million Ounces

	2001	2002
Implied Net Disinvestment	-9.5	20.9
Producer Hedging	18.9	-24.8
Net Government Sales	87.2	71.3
Sub-total Bullion	96.6	67.4
Scrap	182.7	184.9
Total	279.3	252.3

Indian Scenario

Silver imports into India for domestic consumption in 2002 was 3,400 tons down 25 % from record 4,540 tons in 2001.
Open General License (OGL) imports are the only significant source of supply to the Indian market.
Non-duty paid silver for the export sector rose sharply in 2002, up by close to 200% year-on-year to 150 tons.
Around 50% of India's silver requirements last year were met through imports of Chinese silver and other important sources of supply being UK, CIS, Australia and Dubai.
Indian industrial demand in 2002 is estimated at 1375 tons down by 13 % from 1,579 tons in 2001. In spite of this fall, India is still one of the largest users of silver in the world, ranking alongside Industrial giants like Japan and the United States.
By contrast with United States and Japan, Indian industrial offtake for fabrication in hardcore industrial applications like electronics and brazing alloys accounts for only 15 % and the rest being for foils for use in the decorative covering of food, plating of Jewellery and silverware and jari.
In India silver price volatility is also an important determinant of silver demand as it is for gold.

India Industrial Fabrication , 2002

Percentage

Pharmacy & Chemicals	22.4
Foil	9
Plating	13.7
Solders & Brazing	5.4
Electrical	13.5
Photography	0.85
Jari	17.1

World Markets

London Bullion Market is the global hub of OTC (Over-The-Counter) trading in silver.
Comex futures in New York is where most fund activity is focused

Frequency Distribution of Silver London Fixing Volatility from 1995 till date

Percentage Change	> 7%	5-7%	3-5%	< 3%
Daily
Number of times	7	10	85	2086
Percentage times	0.3	0.5	3.9	95.3
Weekly
Number of times	9	15	50	363
Percentage times	21	3.4	11.4	83.1

Biggest Price Movement since 1995

Between February 4 - 6, 1998, daily prices rocketed by 22.3%, as on a noted US financier had accumulated nearly 130 ounces of physical silver.
Note: Post September 1999 daily silver prices have not shown more than 5% movement once and weekly silver prices only once.

Aluminium

Characteristics Of Aluminium

Aluminium is the third most abundant element in the Earth's crust. In nature however it only exists in very stable combinations with other materials (particularly as silicates and oxides) and it was not until 1808 that its existence was first established.
Aluminum is light. Its density is only one third that of steel. Aluminum is resistant to weather, common atmospheric gases and a wide range of liquids. Aluminum has a high reflectivity, and therefore finds more decorative uses. Aluminum has high elasticity, which is an advantage in structures under shock loads.
Aluminium keeps its toughness down to very low temperatures, without becoming brittle like carbon steels. It is easily worked and formed. Aluminium conducts electricity and heat nearly as well as copper.

Supply and Demand

Global Scenario

Aluminium ore, most commonly bauxite, is plentiful and occurs mainly in tropical and sub-tropical areas - Africa, West Indies, South America and Australia. There are also some deposits in Europe
The leading producing countries include the United States, Russia, Canada, the European Union, China, Australia, Brazil, Norway, South Africa, Venezuela, the Gulf States (Bahrain and United Arab Emirates), India and New Zealand; together they represent more than 90 percent of the world primary aluminium production.
The largest aluminium markets are North America, Europe and East Asia.
The global production of aluminium is about 27.7 and 28.9 million tons in 2003 and 2004 respectively.
China, Russia, Canada and United States produced about 6.1, 3.6, 2.64 and 2.5 million tons of aluminium in year 2004 respectively.

Indian Scenario

India is considered the fifth largest producer of aluminium in the world.
It is estimated at about 3037 million tonnes for all categories of bauxite (proved, probable and possible). With the present level of consumption of aluminum, the identified reserves would have an estimated life of over 350 years. India's reserves are estimated to be 7.5 per cent of the total deposits and installed capacity is about 3 per cent of the world.
In terms of demand and supply, the situation is not only self-sufficient, but it also has export potential on a competitive basis. India's annual export of aluminium is about 82,000 tonnes.
India’s annual consumption of Aluminum is around 6.18 lakh tons and is projected to increase to 7.8 lakh tones by 2007.
About a decade back, the primary Indian aluminium producers were BALCO, NALCO, INDAL, HINDALCO and MALCO. Of the five, two (BALCO and NALCO) were in the public sector while the other three were in the private sector
As a result of the process of liberalization of trade in aluminium, India has emerged as a net exporter of aluminium, on competitive terms. Government monopoly, in terms of aluminium production, removal of price and distribution control over aluminium, has been diluted in favour of private sector. The ownership pattern in private sector has undergone changes. With the takeover of INDAL by the HINDALCO, it has emerged as the major producer of aluminium in the country.

World Aluminium Markets

LME, TOCOM, SHFE and NYMEX are the important international markets that provide direction to the aluminium prices.

Copper

Characteristics Of Copper

Copper ranks third in world metal consumption after steel and aluminum. It is a product whose fortunes directly reflect the state of the world's economy.
Copper is the best non-precious metal conductor of electricity. The metal's exceptional strength, ductility, and resistance to creeping and corrosion, makes it the preferred and safest conductor for building wiring. Copper is also used in power cables, either insulated or uninsulated, for high, medium and low voltage applications. Copper is an essential component of energy efficient motors and transformers and automobiles.

Supply and Demand

Global Scenario

Economic, technological and societal factors influence the supply and demand of copper. As society's need for copper increases, new mines and plants are introduced and existing ones expanded.
Land-based resources are estimated at 1.6 billion tons of copper, and resources in deep-sea nodules are estimated at 0.7 billion tons.
The global production of refined copper is around 15 million tons.
The major copper-consuming nations are Western Europe (28.5%), the United States (19.1%), Japan (14%), and China (5.3%).
Copper and copper alloy scrap composes a significant share of the world's supply.
The largest international sources for scrap are the United States and Europe. Chile, Indonesia, Canada and Australia are the major exporters and Japan, Spain, China, Germany and Philippines are the major importers.

Indian Scenario

The size of Indian Copper Industry is around 4 lakh tons, which as percentage of world copper market is 3 %.
Birla Copper, Sterilite Industries are two major private producers and Hindustan Copper Ltd the public sector producers.
India is emerging as net exporter of copper from the status of net importer on account of rise in production by three companies.
Copper goes into various usage such as Building, Cabling for power and telecommunications, Automobiles etc. Two major states owned telecommunications service providers; BSNL and MTNL consume 10% of country's copper production. Growth in the building construction and automobile sector would keep demand of copper high.

World Copper Markets

LME and NYMEX are the two international markets, which provide direction to the copper prices.
The eight leading refining nations, viz., United States,Japan, Chile, Canada, Zambia, Belgium, and the Federal Republic of Germany account for 67% of total refined metal production.

Frequency Distribution of Copper Spot Prices at LME

Percentage Change	0 - 2	2 - 5	5 & above
Monthly	46	36	21

Factors Influencing Copper Markets

Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day.
World copper mine production through exploration of new mine and expansion of existing mine.
Economic growth of the major consuming countries such as China, Japan, Germany etc.
Growth and development in the Building, electronics and electrical industry.

Lead

Characteristics of Lead

Lead is a very corrosion-resistant, dense, ductile, and malleable blue-gray metal that has been used for at least 5,000 years. Early uses of lead included building materials, pigments for glazing ceramics, and pipes for transporting water. Today's major use of lead is in lead-acid storage batteries. The electrical systems of vehicles, ships, and aircraft depend on such batteries for startup, and, in some cases, batteries provide the actual motive power. It is also for soundproofing in office buildings, schools, and hotels. It is widely used in hospitals to block X-ray and gamma radiation and is employed to shield against nuclear radiation both in permanent installations and when nuclear material is being transported. .

Supply & Demand Scenario

Domestic Scenario

Lead production equalled approximately 82,000 tonnes in 2004, mostly from secondary sources.
The main constraint in lead production in the country is the lack of lead ore reserves, which necessitates large-scale imports and recycling.
Lead demand in India was estimated at 150,000 tonnes for 2004. Due to huge gap in demand-supply, India imported nearly about 50% of its domestic demand.
The major suppliers for the imports were China, the Republic of Korea and Australia: 54%, 15% and 10% respectively.
The domestic industry is characterized by the presence of only a few players in the primary segment. The primary lead industry in India is divided between the following main players: Binani Industries Limited and Sterlite Industries (India) Ltd. (Hndustan Zinc Ltd.). Due to increasing use of lead in domestic market both players are expanding their smelting capacities for lead.

World Scenario

USA, Japan, China, EU and India are the major consumers of Lead
Supply is controlled by Australia and China.
Lead in the global market is traded as soft lead, animated lead, lead alloys and copper-base scrap.

Factor influencing demand and supply

Changes in inventory level at LME wharehouses
Economic growth rate of major consuming countries
Global growth and demand in major consuming industries
Prices of the alternative metal(s)
Participation of funds

Global Exchange(s)

London Metal Exchange
IST of Global Exchanges (Price Clues from Other Major Global Exchanges)
LME: 5.30 PM to 10.30 PM

Characteristics Of Copper

Copper ranks third in world metal consumption after steel and aluminum. It is a product whose fortunes directly reflect the state of the world's economy.
Copper is the best non-precious metal conductor of electricity. The metal's exceptional strength, ductility, and resistance to creeping and corrosion, makes it the preferred and safest conductor for building wiring. Copper is also used in power cables, either insulated or uninsulated, for high, medium and low voltage applications. Copper is an essential component of energy efficient motors and transformers and automobiles.

Supply and Demand

Global Scenario

Economic, technological and societal factors influence the supply and demand of copper. As society's need for copper increases, new mines and plants are introduced and existing ones expanded.
Land-based resources are estimated at 1.6 billion tons of copper, and resources in deep-sea nodules are estimated at 0.7 billion tons.
The global production of refined copper is around 15 million tons.
The major copper-consuming nations are Western Europe (28.5%), the United States (19.1%), Japan (14%), and China (5.3%).
Copper and copper alloy scrap composes a significant share of the world's supply.
The largest international sources for scrap are the United States and Europe. Chile, Indonesia, Canada and Australia are the major exporters and Japan, Spain, China, Germany and Philippines are the major importers.

Indian Scenario

The size of Indian Copper Industry is around 4 lakh tons, which as percentage of world copper market is 3 %.
Birla Copper, Sterilite Industries are two major private producers and Hindustan Copper Ltd the public sector producers.
India is emerging as net exporter of copper from the status of net importer on account of rise in production by three companies.
Copper goes into various usage such as Building, Cabling for power and telecommunications, Automobiles etc. Two major states owned telecommunications service providers; BSNL and MTNL consume 10% of country's copper production. Growth in the building construction and automobile sector would keep demand of copper high.

World Copper Markets

LME and NYMEX are the two international markets, which provide direction to the copper prices.
The eight leading refining nations, viz., United States,Japan, Chile, Canada, Zambia, Belgium, and the Federal Republic of Germany account for 67% of total refined metal production.

Frequency Distribution of Copper Spot Prices at LME

Percentage Change	0 - 2	2 - 5	5 & above
Monthly	46	36	21

Factors Influencing Copper Markets

Copper prices in India are fixed on the basis of the rates that rule on LME the preceding day.
World copper mine production through exploration of new mine and expansion of existing mine.
Economic growth of the major consuming countries such as China, Japan, Germany etc.
Growth and development in the Building, electronics and electrical industry.

Nickel

Characteristics Of Nickel

Nickel finds its usage in various industries such as engineering, electrical and electronics, infrastructure, automobile and automobile components, packaging, Batteries etc.
Among base metals Nickel is the most volatile owing to its strong demand and tight supply.
Nickel demand is derived demand based on the growth of different industrial sector thus exhibits high volatility.
About 65 per cent of nickel is used in manufacture of stainless steels, and 20 per cent in other steel and non-ferrous including "super" alloys, often for highly specialized industrial, aerospace and military applications.

Characteristics of World Nickel Market

Nickel world market is characterized by rising demand and constrained supply.
More than 54% if world total supply comes from only five companies.
Global nickel consumption is growing by an average 3.1 per cent a year.

Supply and Demand

Major producers of Nickel are Russia, followed by Australia, Canada, New Caledonia and Indonesia, which represents over 65% of total world production.
World primary nickel consumption is about 1 million tons. Consumption centers are Japan 2 lakh tons and European Union 3.74 lakh tons.
Rapid expansion of global stainless steel production is fuelling demand for primary nickel.

Important World Nickel Markets

London Metal Exchange.

Indian Nickel Market

Nickel market in India is of total import dependent.
India imports around 30,000 tons of Nickel.
Import duty on Nickel is 15%.
With growth in the stainless steel sector Nickel import demand is expected to increase in the coming years.

India in World Nickel Industry

India meets its Nickel Requirement through import.

Frequency Distribution of Nickel at LME

Percentage Change	> 5	2 - 5 %	2 %
Percentage terms	2.1	21.9	76.1

Factors Influencing Nickel Markets

Above ground supply from scrap .
New mines discovery .
Nickel demand is derived demand thus the situation in the various industries.
Growth in consumption of Stainless steel.

Tin

General Characteristics

Cassiterite (SnO2) is the most important mineral ore of tin.
Tin is an important commodity in international trade and is used in hundreds of industrial processes throughout the world.
Utilization is in many industries such as food packaging, culinary equipment, electronics, tin chemicals, plumbing solders, engineering alloys, pewter and bronze in music and the arts, dental amalgams, anti corrosion and engineering coatings, wine capsules and fire retardants. Tin readily forms alloy with other metals and imparts hardness and strength. Tin is an important component of solders, since it wets the base metal by alloying with it.
The industrial application of tin is in the following sectors: Solders - 32 %, Tin Plate - 27 %, Others - 17 %, Alloys - 14 %, P C Stabilizers - 6%, Tinning - 4%.

Global Scenario

The world tin production fluctuates between 2.4 to 3.1 lakh tons. The production in 2001, is estimated at 2.49 lakh tons.
China (80000 - 1,00,000 tons), Indonesia (54000-90000 tons), Peru (50000 - 70000 tons), Bolivia (12000 - 15000 tons) and Brazil (12000 to 14000 tons) are the major producers of tin in the world. These five producers account for around 91% of the world's total production. The other important producers are Australia, Vietnam and Malaysia are the other major producers.
United States is believed to be the world's largest producer of secondary tin.
World tin consumption is estimated to have exceeded supply by 15000 tons in 2003.
Japan is estimated to be the largest consumer of tin in the world. The other major consumers are China and USA.
Globally, the demand is estimated to be above the supply.

Major Tin Markets

The London Metal exchange is the major referral market for futures trading in tin.

Indian Scenario

India's tin production is a meager 10 tons.
India meets most of her tin requirements through imports. It is estimated that India imports around 4000 tons of tin and its alloys (including scrap).
Tinplate packaging is picking up in the country. The market size of tin plate packaging is estimated to be around 3,00,000 tons. In India, tin plate is mainly used for packaging in three categories: edible oil & cashew, processed food and non-food.

Characteristics Of Nickel

Nickel finds its usage in various industries such as engineering, electrical and electronics, infrastructure, automobile and automobile components, packaging, Batteries etc.
Among base metals Nickel is the most volatile owing to its strong demand and tight supply.
Nickel demand is derived demand based on the growth of different industrial sector thus exhibits high volatility.
About 65 per cent of nickel is used in manufacture of stainless steels, and 20 per cent in other steel and non-ferrous including "super" alloys, often for highly specialized industrial, aerospace and military applications.

Characteristics of World Nickel Market

Nickel world market is characterized by rising demand and constrained supply.
More than 54% if world total supply comes from only five companies.
Global nickel consumption is growing by an average 3.1 per cent a year.

Supply and Demand

Major producers of Nickel are Russia, followed by Australia, Canada, New Caledonia and Indonesia, which represents over 65% of total world production.
World primary nickel consumption is about 1 million tons. Consumption centers are Japan 2 lakh tons and European Union 3.74 lakh tons.
Rapid expansion of global stainless steel production is fuelling demand for primary nickel.

Important World Nickel Markets

London Metal Exchange.

Indian Nickel Market

Nickel market in India is of total import dependent.
India imports around 30,000 tons of Nickel.
Import duty on Nickel is 15%.
With growth in the stainless steel sector Nickel import demand is expected to increase in the coming years.

India in World Nickel Industry

India meets its Nickel Requirement through import.

Frequency Distribution of Nickel at LME

Percentage Change	> 5	2 - 5 %	2 %
Percentage terms	2.1	21.9	76.1

Factors Influencing Nickel Markets

Above ground supply from scrap .
New mines discovery .
Nickel demand is derived demand thus the situation in the various industries.
Growth in consumption of Stainless steel.

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