Nickel – a history
Although
nickel is one of the most useful metals today, it was virtually unknown
until the 1600's and wasn’t isolated as an element until 1751. Early
chemists called it Kupfer-Nickel – kupfer for copper because nickel
was originally found in copper ores and nickel for the German “Old
Nick,” or Satan, because nickel was so difficult to extract from those
ores.
Nickel is
malleable, resists corrosion and maintains its mechanical and physical
characteristics under extreme temperature. These properties make it
useful in the manufacture of stainless steel, which accounts for about
65 percent of primary nickel demand worldwide.
Nickel is
also used in steel alloys, batteries and coins.
Suppliers
In 2000 world production of nickel was expected to total more
than 1.1 metric tons. Russia, the world’s largest supplier of nickel,
boasts annual production of 230,000 metric tons. RAO Norilsk Nickel
accounted for nearly 96 percent of total Russian nickel production in
1998 and 22.2 percent of world production. Ranking second in world
nickel production, Canada produces annually 150,000 metric tons.
Canada’s Inco Ltd., which has mines in Canada and Indonesia, accounts
for 19 percent of world production and markets another 10 percent of the
world’s nickel.
The United
States’ sole nickel producer closed its mines in Oregon in 1998
because of low nickel prices.
 Consumers
Since 1960
the demand for nickel has grown at an average annual rate of nearly 4
percent. Primary consumers are the United States, Germany, Italy, Japan,
the Republic of Korea and Taiwan.
Market
Nickel is traded on the London Metal Exchange, where both a cash
and futures market exists for the commodity. Prices are determined twice
a day in what is called a morning ring and an afternoon ring.
In 2000 labor disputes drove the spot price of nickel. In
mid-1999 anticipation of a strike at Inco's Manitoba refinery and the
ensuing 3-month labor strike resulted in depletion of world nickel
inventories, causing nickel prices to increase from $2.35 per pound in
mid-1999 to more than $4.53 per pound at yearend. Anticipation of a
second strike at the Inco's other Canadian refinery in Sudbury, Ontario
on May 31 caused prices to continue to increase to a 5-year high of
$4.80 per pound. Within days of the settlement announcement, prices
declined almost 73 cents per pound. 
Labor disputes also riddled another Canadian producer,
Falconbridge Ltd. The producer’s workers, who went on strike in early
August, ratified a new labor contract on Feb. 22, ending the seven-month
strike.
Outlook
Currently,
oversupply of nickel and a plentiful supply of stainless steel scrap –
a source of nickel – have caused both the futures and the spot prices
to fall.
However
Asia’s economic recovery should help the demand for nickel. An
increase in demand for nickel alloys used in the aerospace sector and
for batteries used in electronics and in hybrid automobiles may also
increase nickel demand.
Russia, and in particular
Norilsk, is the wild card in the supply
of nickel. Although Norilsk’s production generates an important source
of revenue for the Russian economy, it is unknown whether the producer
will be able to upgrade and modernize its current operations and to
explore new mines.
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