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19 July 2014 | Gurjit Degun
Nickel prices have increased significantly over the past six months driven by fears over the future availability of the commodity.
The price of the metal rose as high as $19,429 per tonne in May - up from $15,653.81 per tonne in February - according to figures from the London Metal Exchange. The price has eased slightly, recorded by the LME at $18,562.86 per tonne in June, but remains high. Five years ago the price was $12,622.89 (£7,379.71), and 12 months ago it was $13,699.35 (£8,013.02).
Nickel is used in the manufacture of stainless steel and can be alloyed with other metals to improve their strength and resistance to corrosion.
Robin Bhar, an analyst at Société Générale Corporate & Investment Banking, said the nickel market has changed “dramatically as a result of Indonesia’s ban on nickel ore exports which we expect to be enforced”.
“This one factor alone is likely to shift the nickel market from structural oversupply to a balanced outcome this year, with sizeable deficits probable over coming years,” said Bhar.
He also pointed to the strong global economic outlook which is likely to drive higher nickel usage in stainless and non-stainless sectors. “After an increase of 7.3 per cent in 2013 we expect global nickel consumption growth to slow to 3 per cent year-on-year in 2014, as higher nickel prices prompt substitution into stainless grades with a lower nickel content.”