Antam sees lower nickel price

Rendi A. Witular, The Jakarta Post/Jakarta

State-owned mining firm PT Aneka Tambang (Antam) forecasts a lower nickel price next year as metal brokers are expected to reduce speculation activities on the commodity.

Antam president director Dedi Aditya Sumanagara said the average price for nickel contained in ferronickel was likely to stand at between US$4.50 and $5 per pound next year, down from the current average of $6.19 per pound.

"I think the most feasible and acceptable price for both producers and buyers is between $4.50 and $5 per pound. The current high price of nickel is mostly driven by speculation," Dedi told reporters and investors recently.

The price of nickel has skyrocketed to a record high this year, spurred by strong global demand, particularly from China, amid a limited supply following disruptions in the operations of a number of giant nickel producers.

Nickel is mostly used for stainless steel and for some automotive components.

Consumption of stainless steel in China is estimated to grow by around 40 percent next year to five million metric tons, meaning that the country may need some 200,000 tons of nickel to fulfill its stainless-steel demand.

Antam operation director Alwin Syah Loebis explained that although nickel demand from China would remain strong next year, nickel prices were estimated to clearly reflect the real supply and demand as speculation was likely to abate.

"We hope there will be no disruption in nickel production next year to avoid such issues being used to speculate on nickel prices. There are unlikely to be any significant issues next year to cause the price to soar," said Alwin.

Alwin said that China was not Antam's traditional market, and that the company would continue to focus on meeting demand from Japan, South Korea and Europe.

Publicly listed Antam plans to focus on fulfilling nickel demand from China in 2006.

Sales of Antam commodities -- nickel, gold and silver -- from January until September surged to Rp 1.94 trillion from Rp 1.42 trillion, with operating profit also rising to Rp 701.3 billion from Rp 287.4 billion.

Its net profit more than tripled to Rp 520.7 billion ($57.8 million) from Rp 144.5 billion in the same period last year.

The company sold 5,394 tons of nickel contained in ferronickel and 2,754 kilograms of gold. Ferronickel is raw material from which nickel is derived.

Antam is 65 percent owned by the government and 35 percent by the investing public.

Graphic Antam average nickel prices (in US$ per pound)

2001 2.63 2002 3.05 2003 4.06 2004 6.19*

* In the first nine months Source: Antam