Network Metals LLC

We have noticed a lot of the chatter about the height of nickel stockpiles lately, and if they remain that way it seems like ultimately prices will have to come down. As we have been saying recently, the looming strike by unionized workers at the Vale plant in Sudbury, Ontario is likely already priced in to nickel prices, and sellers are hovering, waiting for a chance to sell the rally at the strike announcement. The workers’ rejection of Vale’s offer only heightens the likelihood of a strike, and still nickel prices are not rising like one might think. This seems to us to be a case of “buy the rumor, sell the news”. By the same token, without a significant recovery in the stainless steel market we don’t see how nickel prices can be supported at these levels anyway, so we are probably due for a further fall.