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Economic Nickel Outlook

Economic Nickel Outlook. ISRI Annual Convention Las Vegas - April 5, 2006. Jason Schenker Economist 704.383.3695 jason.schenker@wachovia.com. Supply, Demand and Other Factors. U.S. Growth Chinese and Non-OECD Growth High Energy Prices The Impact of The Dollar. Supply.

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Economic Nickel Outlook

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  1. Economic Nickel Outlook ISRI Annual Convention Las Vegas - April 5, 2006 Jason Schenker Economist 704.383.3695 jason.schenker@wachovia.com

  2. Supply, Demand and Other Factors • U.S. Growth • Chinese and Non-OECD Growth • High Energy Prices • The Impact of The Dollar

  3. Supply

  4. Imports By Country Gasoline

  5. By Country Gasoline Source: USGS

  6. U.S. Nickel By The Numbers • Global Consumption of Nickel in 2005: 1.5 million metric tons • U.S. Consumption of Nickel in 2005: 221,000 metric tons • U.S. Consumption as Percent of Global: 14.7 percent • Recovered U.S. Nickel Scrap in 2005: 85,200 metric tons • Percent of 2005 Consumption: 39 percent Source: USGS

  7. Economic Growth

  8. GDP Gasoline

  9. GDP Gasoline

  10. Nickel Demand Sectors • U.S. Oil Rig Reconstruction • Aircraft Construction (Dreamliner and Airbus Engines) • Retail Boat Sales • Stainless Steel Consumer Goods

  11. Foreign Growth

  12. E.U. GDP Gasoline

  13. Chinese GDP Gasoline

  14. Hybrids, Hydrogen and Ethanol?

  15. Nickel LME Price

  16. A Bold Statement: Toyota At Frankfurt • Estimated Nickel Per Hybrid Battery: 150 lbs. • Number of Vehicles Toyota Made in 2005: 6.2 million • Pounds per Metric Ton: 2204.6 lbs. • Total Nickel in Metric Tons to Do the Job: 422,000 • Percent of 2005 Cathode Production: 28%

  17. Ethanol

  18. Platinum

  19. Auto and Hybrid Expectations • Sale Prognosis: • Gradual Sale Growth • Secular Turn From SUVs • From Big Three to Medium Six or Seven • Hybrid Outlook: • Secular Turn From SUVs Levels Off • Hydrogen is Decades Out • Ethanol is Still Pricey vs. Gasoline • Increased Industrial and Military Interest • Hybrids Can’t Do it Alone!

  20. Energy Prices Support Cathode Prices

  21. NGCL

  22. HUHO

  23. Supply Disruption Premium

  24. Energy Trends and Expectations • Growth Outlook: • Crude Price Band $55-$65 likely for the rest of 2006 • Demand is Robust • Supply Outlook: • Crude Markets Are Well-Supplied • Apparent Balance Between Supply, Demand and Disruption Fears • Risks for Nickel Production: • Diesel Regulations Changing – Upward Price Risks For Mining • Natural Gas Prices Q3 and Q4 Still Supported By Weather Risks

  25. The Dollar and Nickel

  26. Nickel LME Price

  27. Nickel LME Inventories

  28. Nickel and Dollar REG

  29. Nickel and Dollar

  30. External Indicators

  31. Dollar Exchange Rates

  32. Nickel Price Outlook • Growth Outlook: • Continued Strong U.S. and Global Growth • Rebuilding of Oil Rigs, Aircraft, Boats and Other Consumer Goods • Energy Outlook: • Prices Moderating, But High • Risks to Consumer Energy Prices • High Prices Likely to Engender Further Interest in Hybrids • Dollar Correlation: • Statistically Significant • Commodity-Currency Arbitrage Makes Sense • Since End of Last Recession: Over 83% of Variation • No Domestic Mine Production • Price Expectations: • Despite Oncoming Supplies, Price Risks Upside

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