Nickel has been one of the biggest sufferers in the global commodity price meltdown. However, it has been making a steady comeback fuelled by investment demand this year mainly driven by massive Chinese imports, and the stainless steel market recovery worldwide. As the global stainless steel production slowly rebounds towards its highest levels and since stainless steel mills account for over two-thirds of nickel demand, it's no surprise that Nickel prices have witnessed a spike in the recent times. As nickel’s chief application is as a constituent of a major building material, nickel use mirrors economic growth.
Nickel has jumped about 45% since the start of 2010, while copper and aluminum have risen merely 5%. And since its low point in late 2008, the commodity’s price has more than tripled to $27,500 a ton thanks to strong demand from the stainless steel industry along with supply disruptions.
Some 80% of nickel is use to produce steel products - with stainless steel being particularly important. Stainless steels are used in the building industry, automobiles, food & beverages and water industries
Nickel is taking off because there has been a huge rise in the demand for everything from home appliances to hybrid cars especially in rapidly emerging markets like China and India.
LME nickel stocks are currently sitting at around 116,034 MT, equivalent to around seven weeks of world consumption.
Nickel is a primary component in stainless steel and stainless steel is in all kinds of everyday things we use including home appliances and cell phones.
Nickel Global Demand:
Usage of nickel has increased over time and is correlated with economic development. In the past decade world nickel demand increased from 1.009 million MT in 1998 to 1.278 million MT in 2008, a growth rate of 2.4 % per year. However, the upward trend has had peaks and valleys. sia is now the largest regional market for nickel representing 54 % of total world demand. China alone now accounts for 25 % of world nickel demand compared with 4 % ten years earlier.
Nickel Mining: Nickel exists in the earth’s crust in two main types of deposits, laterites, and sulphides. Each deposit presents unique challenges to the mining companies who try and extract the nickel contained within. Sulphide mining presents difficult geological conditions (the deposits are found very deep in the crust), and variable grades.
Sulphide Nickel: Sulphide nickel is a rare type of nickel known as the “King of Deposits” because it’s much easier to mine than the more common laterite nickel. And that means it’s less expensive to extract. So it’s potentially even more profitable. Among the Canadian companies with sulphide nickel deposits expected to be developed in the few years are Mustang Minerals Corp., Victory Nickel Inc., Canadian Arrow Mines Ltd., Canadian Royalties Inc. and Mirabela Nickel Ltd.
Nickel is used in many industrial and consumer products, including stainless steel, magnets, coinage, rechargeable batteries, electric guitar strings and special alloys. It is also used for plating and as a green tint in glass. Nickel is pre-eminently an alloy metal, and its chief use is in the nickel steels and nickel cast irons, of which there are many varieties. It is also widely used in many other alloys, such as nickel brasses and bronzes, and alloys with copper, chromium, aluminum, lead, cobalt, silver, and gold.
Investing In Nickel: Nickel prices have seen steep climbs and descents since the early nineties. Nickel demand in Europe decreased in the period 2002-2005 before recovering in 2006. In the Americas, demand fell between 2002 and 2003 before growth resumed in 2004. Nickel demand has increased strongly in Asia throughout the same period, as hyper-developing China is the largest consumer of Nickel to date.
The price of nickel has shown considerable volatility over the last thirty years. The chart below shows the historic price for nickel in both real and nominal values.
