InvestorQ : What really determines the demand and supply of nickel?
Tisha Malhotra made post

What really determines the demand and supply of nickel?

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Dilmini Mercia answered.
2 years ago

According to the Global Nickel Institute, the first extracts of nickel were found almost 2000 years old. In the early days, nickel mining was feared as it led to arsenic poisoning with devastating effects. The real spurt for nickel demand came in the first half of the 20th century when stainless steel was first discovered. Today, nearly 65-70% of the total nickel mined in the world goes into the production of stainless steel. Nickel is lustrous but is also resistant to high temperatures and is also highly anti-corrosive. In fact, Nickel has a very high melting point of 1453 degrees centigrade, which makes it the perfect foil for high pressure manufacture. Apart from stainless steel manufacture, another 20% of the nickel is used for highly specialized applications like aerospace and military applications.

In terms of supply, countries like Russia, Canada, Australia, Indonesia and Cuba are among the principal producers of Nickel. Each year nearly 1.4 million tonnes of nickel is produced and used. In sheer volume terms, nickel production is much smaller compared to 10 million tonnes of copper produced annually and a massive 800 million tonnes of steel produced annually. Out of the 1.4 million tonnes of nickel produced annually, nearly 1 million tonnes is freshly mined and produced while the balance of 0.4 million tonnes of nickel is produced through recycling. Like lead, since nickel has a very long life, recycling becomes a key source of supply.

Over the last few years, nickel production has been consistently higher than the demand for nickel by nearly 10%. This gap has been largely responsible in applying pressure on the price of nickel as the LME chart clearly indicates.