Nickel is a metallic chemical element similar in form to chromium, aluminum and titanium, but is slow to react in air at normal temperatures and pressures. Nickel is magnetic and is valuable for the alloys it forms, especially many superalloys, and particularly stainless steel.
Thirty-eight percent of annual nickel use is in nonferrous alloys (or mixed with metals other than steel) and superalloys (metal mixtures designed to withstand extremely high temperatures and/or pressures, or to have high electrical conductivity). Nickel is used as a coating on other metals to slow down corrosion. Nickel coatings account for 14% of nickel use.
The remaining 6% of the annual nickel use is for a variety of purposes including the production of coins, nickel-cadmium and nickel-metal hydride batteries; as a catalyst for certain chemical reactions; and, as a colorant, nickel is added to glass to give it a green color. The U.S. 5-cent piece is called a "nickel" because it only contains 25% nickel.
A wild ride ahead for nickel price?
A research analyst for Alto Capital, Carey Smith told the Australian Nickel Conference today that nickel could trade between US$8,500 and US$17,000 a tonne over the next few years.
This would be a result of unwinding of global stimulus packages that have a negative impact on resources-based commodities.
Smith, said that while the worst of the global financial crisis appears over, challenges still abound.
"United States and European growth can be expected to be sluggish over the next 12 months as demand for commodities eases," he said.
"The current commodity prices - including nickel in excess of US$19,000/tonne - cannot be justified by current supply and demand fundamentals.
"We should expect an easing to a low of around U$S11,000 a tonne in 2011 - still a good price - before recovering slightly to around US$14,000 per tonne by calendar 2014.
"While the prices will ease, mid-cap Australian nickel producers are trading around fair value and should remain strong at least for another few months."
Smith said downward price pressure would also result from current global stockpiles of 35 days of consumption compared to historic supply stocks of 10 days.
"This is the highest stockpile level since the fall of the Soviet Union in December 1991 and there are additional but unknown quantities being held in China and Russia.
"Price easing will also be fuelled by the fact the spate of mine closures globally has not been enough yet to offset weak nickel demand and the winding back of globally stimulus packages estimated in size at a total of $US7,000 million.
"To put those stimulus packages in perspective, that is over nine times the size of the Australian economy and enough to acquire the whole pool of combined Australian mid-cap nickel producers.
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