The global nickel market has a volatile history which has experienced periods of prolonged growth followed by sustained periods of lows. The Assay breaks down market and demand trends for nickel over the last few years, giving an in-depth breakdown of the metal characteristics and uses.

Understanding nickel

Nickel is a whitish, ductile and malleable ferromagnetic metal with the symbol Ni and the atomic number 28. Nickel is an excellent conductor of both heat and electricity, is bivalent, and is harder than iron. An often sought-after property of nickel is its ability to resist corrosion at even higher temperatures. It is frequently associated with coinage but is utilized in various applications, particularly within stainless steel alloys and several other domestic and industrial industries.

According to The Nickel Institute, nickel will immediately alloy with many other metals, including iron, chromium, molybdenum, and copper. Alloying nickel with other materials creates metals resistant to corrosion and maintain exceptional high-temperature strength and other unique properties, such as shape memory and low amounts of expansion.

There are several different variations of nickel products, the most common being:

Wrought nickel
Nickel-pig iron
Nickel-iron alloys
Nickel-copper alloys
Nickel-molybdenum alloys
Nickel-chromium alloys
Nickel-chromium-iron alloys
Nickel-chromium-cobalt alloys
Nickel-titanium alloys

What is nickel used for?

The Royal Society of Chemistry states that nickel is commonly used to plate other metals to protect them from corrosion. It’s main purpose worldwide, however, is to make alloys, particularly stainless steel.

RSC explains that nichrome is a common alloy created by combining nickel, chromium and silicone, manganese, and iron. Due to the application of nickel, nichrome resists corrosion, even under extreme temperatures, which has led to it being used in many heat-intensive applications, such as ovens.

A copper-nickel alloy is frequently used in salt removal plants, transforming seawater into freshwater. Other alloys of nickel are used in boat propeller shafts and turbine blades.

Lithium-ion batteries used by many major electric vehicle (EV) makers use a cathode predominantly composed of nickel, which is skyrocketing demand for the commodity. Mega-company Tesla recently finalized a deal stipulating the company would buy 75,000 tonnes of nickel from Talon Metals Corporation (TSX: TLO) over the next six-year period, signifying the significant rise in demand for the metal.

However, as reported by S&P, not all nickel is suitable for producing lithium-ion cathodes; only nickel sourced from sulphide and limonite deposits is possible.

Historical nickel prices

Nickel prices have experienced turbulence over the last few years, undergoing significant highs and lows. Below is a graph provided by Bloomberg, which shows nickel price performance from 2003 to 2016.

Nickel hit an all-time high in 2007, with commodity prices per metric tonne reaching US$53,750. Comparatively, in 2016, prices decreased by a substantial 82%. Reuters reported the reason for this significant decline, stating that between 2015-2016 prices for nickel crashed by 40% alone due to rising stockpiles and weak Chinese demand.

The nickel market picked up in 2016 and 2017 after a considerable period throughout 2015.

Glencore (LSE: GLEN) provided a table showing the market balance for nickelsupply and demand from 2015 to 2018.

The market balanced out from 2016, where demand significantly surpassed supply capacities in 2017. This stabilization was primarily due to environmental crackdowns in China’s stainless steel sector and NPI production, accounting for an estimated 50% of global consumption.

The combination of large closures of supply (over 200,000t) and a steady resurgence in global demand led to an exceptional recovery in the nickel market from 2016 to 2019, with prices at one stage doubling from their lows.

Since 2018 to 2020 the nickel market has remained tempestuous, according to economic data provided by FRED, which is expressed in the table below, the market has been soaring from April 2020 onwards

Nickel Spot Price

The most recent spot price per ton of nickel in February 2022, reported by S&P Capital, is US$176,770 per tonne. The future contracts for nickel will depend on a possible supply shortage and slowing demand.

Nickel supply

Nickel supply has gradually increased over the last three to four years. According to Statista.com, the worldwide supply of nickel amounted to almost 2.53M metric tonnes in 2020. It is projected that the nickel supply will increase to roughly 3.24M metric tonnes globally in 2022.

The U.S. Geological Survey (USGS) produced a report stating the worldwide mine production of nickel in 2020 was assessed at 2.5M tonnes. Indonesia was the most significant producer at 760,000 tonnes, or 30.4% of global mined production. Canada ranked sixth, with 6.7% of the global total.

In January 2019, the report noted that Vale (NYSE: VALE) mining in Indonesia’s Central Sulawesi Province initiated a project to generate nickel use in batteries. According to the USGS, various mothballed facilities and postponed development projects commenced activity in the hope of growing demand for nickel in electric vehicle (EV) lithium-ion batteries, therefore boosting worldwide nickel supplies.

Nickel mines in the world

According to GlobalData’s mining database:

The Sorowaka Mine owned by Vale

The mine is located in Indonesia and produced an estimated 71.6Kt of nickel in 2020. The Sorowaka mine was the largest producer of nickel in 2020.

The Taganito Mine owned by Nickel Asia Corporation (NIKL: Philippines)

The surface mine is located in Surigao del Norte, Philippines. The surface mine produced an estimated 67.3Kt of nickel in 2020.

The Oktyabrsky Mine owned byNornickel (OTC: NILSY)

The underground mine is located in Krasnoyarsk Krai, Russia and produced an estimated 52.9Kt of nickel in 2020.

The Oktyabrsky mine is a key indicator of the growing demand for nickel. The mine experienced halted production due to flooding, but has already resumed full production capacity of daily mine volume of 14.1Kt.

Nickel demand

According to a report produced by Reuters, nickel demand is set to increase throughout 2022 due to global consumption of EVs. It is set to maintain a central role in the worldwide energy transition due to the growing market for nickel-cobalt-aluminium batteries, accounting for around 10% of all nickel demand.

Reuters also noted that EV sales in core markets, such as China, Europe, and the U.S. saw a rise of around 130% on the year to over 3M units in 2021. The Swiss international bank UBS said in the report for Reuters that it had newly upgraded its EV forecasts for China and anticipates worldwide EV sales to grow by 60% year on year to around 4M units in 2022.

Nickel’s use in stainless steel has also accounted for its increase in around 11% in 2022, after rising 25% in 2021 and 18% in 2020.

However, the stainless-steel industry predominantly utilizes ferronickel, which is not typically suitable for lithium-ion battery production. Rather, battery grade nickel requires higher quality sulphide deposits, which are significantly limited across the globe.

Demand is ferociously growing due to these already apparent supply constraints, particularly for high-grade nickel sulphide.

Future of nickel

Despite S&P analysts forecasting a surplus of nickel production in 2022, ultimately, nickel demand is set to outstrip supply by 2024 in the coming years, according to research conducted by Rystad Energy. The analysis states that nickel will experience steady demand year-on-year until it eventually exceeds current production capacities. The report says that the global supply and demand gap will widen quickly to a deficit of 0.56Mt by 2026.

This unprecedented demand for nickel has generated “the most significant degree of tightening surprise in balance across the base metals in 2021”, according to Goldman Sachs for Reuters.

This tightening means the nickel market is set for a positive future. With nickel pricing stability maintained from the steel industry and growth expected from EV batteries, investors and miners alike will be looking to source new nickel supplies.

Nickel market outlook

S&P Global Market Intelligence anticipates worldwide core nickel consumption to bounce back in the coming years due to stainless steel production capacities developing worldwide, predominantly in Indonesia and China.

Other than China, external demand is anticipated to be the central driver of global growth in volume terms in 2022, and global consumption is projected to expand at a compound annual growth rate (CAGR) of an estimated 7% from 2020 to 2025.

This global consumption will require new nickel sources to be acquired, thus encouraging investment in new exploration programmes and into developmental programmes with pre-existing nickel mining projects that may have mothballed during times of global nickel surplus.

Nickel price forecast

Nickel prices rebounded in 2021, hitting a multi-year highdue to many industries recovering from the impact of covid, and the introduction of new green technologies which incorporate the metal in a significant way.

There are contrasting opinions as to whether nickel prices will remain high or hit a slump in 2022 due to an initial surplus in response to China and Indonesia resuming steel-producing activities.

However, the consensus amongst nickel price predictions is that the resource will grow in correlation with rising demand circulating the EV space, combined with possible supply disruptions from major nickel producing areas, mainly as Southeast Asia is predicted to fulfil global demand.

For more information on nickel, take a look at our nickel news centre.

Tags: Nickel