Leaders from the Group of Seven advanced economies will discuss actions to reduce global industrial overcapacity, with an emphasis on the current steel glut, when they meet in Japan next week, according to a senior White House aid.
Wally Adeyemo, deputy national security adviser for international economics, state that the leaders would discuss ways to influence countries responsible for excess capacity in base metals.
He highlighted the need to work with South Korea, Brazil and India, but did not single out China, which is the country most often responsible for excess steel and aluminum production that has been flooding markets and causing job and production cuts in the G7 countries as well as worldwide.
Major miners are trying to avoid hundreds of millions of dollars in closure costs by selling off pits, as cash is tight given the prolonged commodities price slump, but the crippling cost of environmental rehabilitation makes it difficult to seal deals.
Where mine sales have gone ahead, production is being prolonged, adding to oversupply in depressed markets, like coal. In specific cases, such as in nickel, producers are continuing to produce at a loss to avoid closure costs.
BHP held on to its loss-making Nickel West operation after failing to find a buyer for a business estimated to have $1 billion in closure liabilities. BHP's Australia president Mike Henry recently said it will continue running it and look to sell or close it down the track. As he stated, "The barrier to exit is far greater than the loss of running it".
Goldman Sachs on Thursday forecasted a rise in zinc price for the ongoing and coming years, citing stronger than previously anticipated demand from China and a tightened supply.
The influential commodities bank continues to remain pessimistic on other metals, including copper as it sees supply rising sharply throughout the year.
While nickel prices may have touched bottom in this cycle the overriding feeling is that excess supply will leave a significant upturn in fortune the preserve of 2017, when vast stocks are consistently moving in the right direction for fundamental reasons. Most market speculators expect prices in 2016 to average close to current levels at around $9,000 per tonne.
Mindful of the recent poor track record of consensus forecasts in nickel, however, and the metal’s propensity for wild price swings, industry watchers are wary of potential surprises that may lie in store to confound that consensus.
New Caledonia's nickel industry is in difficult situation as large stocks are expected to prolong a recent considerable decrease in nickel's price.
According to the local newspaper Les Nouvelles caledoniennes, it was recently discovered that 75 percent of nickel producers worldwide could not cover their costs.
In New Caledonia's case, the plants of SLN, Vale and Koniambo have to implement structural reforms related to a limited industrial base, high electricity and labour costs.
Oil prices rose close to six-month highs on Friday as a series of supply breakdowns in Nigeria, Canada and Libya.
Benchmark Brent crude prices were up 45 cents at $49.26 a barrel.
U.S. West Texas Intermediate (WTI) crude traded at $48.59 a barrel.
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