We anticipate an average nickel price of US$8,760/t (US$4.00/lb) in 2016. Fundamentals remain weak and sentiment remains poor. More than 25% of annual nickel demand is held in LME/SHFE warehouses, with at least the same amount stored in off-exchange locations. Although some producers have closed or cut back, we are still maintaining a negative market adjustment of 65kt for 2016 and this helps to push the market into deficit. But high stock levels will cap any rally in prices, resulting in annual average prices of US$9,250/t (US$4.20/lb) in 2017 and US$10,350/t (US$4.70/lb) in 2018. New project supply that is needed from 2020 will probably come from Chinese/Indonesian ventures, with western producers contributing to the short fall from 2025. This will require a long term price incentive of US$19,400/t (US$8.80/lb).