SINGAPORE -（Dow Jones）- Vale SA （VALE） nickel production from its Canadian operations is bouncing back towards 2008 levels, Macquarie Bank said in a report Monday.
Citing data from government agency Natural Resources Canada, Macquarie estimates that Vale's production of refined nickel from its Canada operations in the fourth quarter of 2010 rose 146% from the previous quarter to 32,000 tons.
"Such a strong post-strike ramp-up will come as a surprise to some but is certainly in line with reports that have come out of Canada in recent months regarding higher production," Macquarie said in the report.
Production at Vale's Sudbury nickel refinery was affected by a strike from the second quarter of 2009 until an agreement was reached with unions last July.
A strike at Vale's Voisey's Bay nickel operations in eastern Canada remains unresolved, although non-union workers have helped to keep production near normal levels, said Macquarie.
Macquarie estimates that world refined nickel output reached 1.43 million tons in 2010, up 6.1% from the previous year. It forecasts that 2011 output will rise 9.7% to 1.57 million tons, with Vale's Canadian operations to account for much of the increase.
The bank estimates that the nickel market was in a 63,000-ton deficit in 2010, and it expects a deficit of 6,000 tons in 2011.
"This does not suggest any major downward pressures on nickel prices emerging any time soon," it said.
At 0340 GMT, London Metal Exchange three-month nickel was at $25,900/ton, up $25 since Friday's kerb. The contract has risen 4.2% since the start of the year.
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