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Nickel miners soar as commodity price stages turnaround

ASX-listed nickel miners are soaring on the ASX today, as the commodity price stages a resurgence.

Nickel prices had fallen more than 20% to below US$7 a pound, as stockpiles surged 45% to record levels, according to Bloomberg.

Investment bank Goldman Sachs is forecasting that China will cut its nickel pig iron output by around 70,000 tonnes a year, in an attempt to reduce pollution levels prior to the Asia-Pacific Economic Cooperation meeting that begins in Beijing on November 10.

Earlier this year, Indonesia placed a ban on the export of unprocessed ore, including nickel, which saw the commodity’s price and stockpiles soar by 50% from January to mid-May.

In mid-afternoon trading, Mirabela Nickel Limited (ASX: MBN) had jumped 27.4% to 7.9 cents, Poseidon Nickel Ltd (ASX: POS) was up 8.6% at 15.2 cents, while Sirius Resources Ltd (ASX: SIR) and Western Areas Ltd (ASX: WSA) had gained 6.0% and 5.7% respectively. Panoramic Resources Ltd (ASX: PAN) was also up 4.8% at 55 cents.

Mirabela shares have surged more than 113% in just the past five days, after exiting voluntary administration. The miner was forced to recapitalise the company, in order to re-list at the end of June this year. The problem for Mirabela is that its latest quarterly report showed the company was likely making a loss, and will need to the nickel price to continue to rise.

Poseidon Nickel is still ramping up to commercial production at a number of nickel projects, but has signed an offtake agreement with BHP Billiton Limited (ASX: BHP). Sirius Resources continues to develop its Polar Bear and Nova prospects, receiving major construction tenders from a number of parties, receiving a mining lease for Nova and raising $189 million from shareholders.

Panoramic today says it expects to produce 20,000 to 21,000 tonnes of contained nickel in the 2015 financial year, while Western Areas continues to drive production higher and its operating costs lower.

With a possible recovery in nickel prices underway, it wouldn’t surprise to see the nickel miners gain further from here.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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