THE NICKEL MARKET - 1996 TO 1998

The 1996 nickel market under-performed compared to most initial expect ations. Consumption declined by more than 3 % versus 1995, while produ ction, despite a number of setbacks, still increased by 4 %. Factoring in net imports from the former East Bloc, the market registered a ver y modest deficit. Although the absolute tonnage of stocks declined, in ventories expressed as weeks of consumption, actually rose from 7.9 at the end of 1995 to 8.0 by the end of 1996. The forecast for 1997 call s for consumption to increase by almost 6 %, more than recovering from the contraction of last year. Production will also be up 6 %, the res ult being a moderate supply-demand deficit, with inventories shrinking to 6.6 weeks of consumption. Growth in production should outpace that of consumption in 1998, though the market is still expected to regist er a small deficit. While exports from the CIS will continue to be dif ficult to predict, the greatest risk to the forecast for both 1997 and 1998 is Western World production. Capacity utilisation in slated to r ise from 82 % in 1996 to 86 % in 1998, indicating that production esti mates may be susceptible to downward revisions.