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Nickel

Nickel is a naturally occurring, lustrous, silvery-white metallic element. It is the fifth most common element on earth and occurs extensively in the earth's crust. However, most of the nickel is inaccessible as it is located in the core of the earth.Reflecting these characteristics, nickel is widely used in over 300,000 products for consumer, industrial, military, transport, aerospace, marine and architectural applications. The biggest use is in alloying - particularly with chromium and other metals to produce stainless and heat-resisting steels. These are used for pots and pans, kitchen sinks etc, as well in buildings, food processing equipment, medical equipment and chemical plants.About 65% of the nickel which is produced is used to manufacture stainless steels. Therefore demand for it is closely linked to stainless steel production which is often an indicator of growth of economies. As the Chinese economy isn’t only lagging but also aiming at transforming away from an investment-based (largely in construction/plants/infrastructure/power) economy into a consumer-based economy, the outlook for stainless steel demand and therefore nickel isn’t very rosy for now.

Another 20% is used in other steel and non-ferrous alloys - often for highly specialized industrial, aerospace and military applications. About 9% is used in plating and 6% in other uses, including coins, electronics, and in batteries for portable equipment and hybrid cars. In many of these applications there is no substitute for nickel without reducing performance or increasing cost.

Nickel occurs in nature principally as oxides, sulphides and silicates. Ores of nickel are mined in over 23 countries and are smelted or refined in 25 countries. Most important are Russia, Canada, New Caledonia, Australia, Indonesia, Cuba, China, South Africa, Dominican Republic, Botswana, Columbia, Greece and Brazil. Important nickel refineries also operate in Norway, Finland, France, Japan and the United Kingdom. Primary nickel is produced and used in the form of ferro-nickel, nickel oxides and other chemicals, and as more or less pure nickel metal. Nickel is also readily recycled from many of its applications, and large tonnages of secondary or "scrap" nickel are used to supplement newly mined metal.

Only about 1.4 million tonnes of new or primary nickel are produced and used annually in the world, compared with over 10 million tonnes of copper and nearly 800 million tonnes of steel. An estimated 0.35 million tonnes of scrap nickel is recycled every year.

Supply and demand

As mentioned, nickel demand is closely linked to the fate of China. As growth of this emerging power house is slowing down this year, the fundamentals looked bleak, however Indonesia decided to help the nickel story by banning exports of the metal, ordering producers to refine it first inside Indonesia, instead of exporting nickel concentrate to refiners in China. This caused a temporary recovery in nickel prices, but not for very long as soft metal sentiment sent every metal (except lithium) lower in 2015. The outlook for 2016 is more or less bouncing along the bottom, as there are no fundamentals set to improve markedly very soon. Production cuts have been announced recently by the likes of Glencore, but to no avail. The markets are very sceptic about demand, and are expecting Glencore oversupply to return to the markets as soon as nickel prices start t orecover, in fact creating an overhang as many analysts don’t expect those cuts to be permanent.

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