Network Metals LLC

We are seeing nickel prices continuing to climb higher on the LME, which it has done now for the past couple of weeks. It is not economic yet, but continued higher nickel prices could eventually bring back the relevance of one of our most talked-about 2008 topics: nickel pig iron. During the base metals boom of the second and third quarters of 2008, nickel prices bounced so high that (mostly Chinese) producers of NPI, which has lower Ni content than refined nickel metal, began to ramp up production. Once nickel prices collapsed, NPI again became irrelevant and most producers shut down.

But with margins widening for Chinese nickel consumers (China is a net importer of nickel), NPI could become an attractive alternative again. We are still a long way from NPI prices kicking in, as our customers tell us nickel will have to be up around $25,000. But we believe that if nickel prices continue to rise over the next few months, nickel pig iron will again become an important component of the nickel industry. It is certainly something to keep your eye on, especially if the current base metals rally continues to hold.