Metal prices expected to recover in Q3

Nickel Asia Corp. expects metal prices to recover in the third quarter of this year.

Company president and CEO Gerard H. Brimo said prices of nickel and ore commodities softened in the first quarter largely due to the uncertainties in the eurozone, the economic slowdown in China and the lackluster recovery of the US economy.

The softening, he said, was partly due to recent strengthening of the dollar and the seasonality of the commodities.

“Commodities are priced in US dollar. Normally, when the dollar strengthens, commodities tend to go the other way. Also, we are in the summer months and you get into the summer doldrums. By the time the Western world gets out of summer and into fall, we will likely see economic activities picking up and slight increases in commodity prices, too,” Brimo said.

Brimo said the first quarter was typically the slowest for Nickel Asia. Shipments, particularly of the higher margin products such as high-grade saprolite ore and low nickel-high iron ore varieties, are expected to pick up in the second quarter, Brimo said in the company disclosure in May 2012.

Nickel Asia vice president Dennis Zamora also said it was widely expected that metal prices would pick up toward the end of the year partly because of Indonesia’s decision to limit its raw ore exports.

“I think many expect recovery in prices in the third or fourth quarter,” Zamora said.

“In anticipation of (Indonesia’s move), the Chinese started hoarding (nickel ore) pushing up the stockpile in China to 16 million tons. The normal level is 7 million to 8 million tons. When that stockpile is consumed and Indonesia is not shipping as much as before, then we will start seeing the beneficial effects to Filipino shippers. We think it will take at least two months for that stockpile (in China) to come down,” Zamora said.

Officials said sales and profit would depend on metal prices but as for the volume, the company was expected to match the 10.4 million wet metric tons of nickel ore exports it posted in 2011.

In its unaudited financial report, Nickel Asia said that its sales dipped 16 percent to P1.75 billion in the first quarter this year from P2.07 billion in 2011 despite higher sales volume.