Nickel Prices Explained

Nickel prices increased 0.57% since the beginning of 2024, leading experts to believe that the commodity is positioned for recovery in 2024. Will nickel prices continue showing positive trends throughout this year? Check its top price fluctuation factors:

Why are nickel prices fluctuating?

1. Supply Dynamics

The uneven equilibrium between supply and demand greatly affects nickel prices. The global nickel supply outpaced its demand for several months, with Indonesia’s production rising by 29.2% year on year in the first 10 months of 2023, according to the International Nickel Study Group. 

Conversely, its demand remains robust driven by electric vehicle adoption. Thus, experts predicted that this need will gradually outstrip the commodity’s supply, leading to its elevated prices.

2. Weak Demand from China

The biggest importer of nickel lowers its nickel purchasing by 65%. The country’s imports of Class 1 refined nickel totaled just 3,204 tons in April 2023, the lowest monthly total since January 2004. 

Additionally, the country’s steel production which uses 75% nickel is significantly low which largely affects nickel prices.

3. Rising Interest Rates

The rising interest rates put downward pressure on metals, including nickel prices. These higher interest rates make it more expensive for businesses to borrow money, which leads to a decrease in investment in new projects.

The U.S. Federal Reserve continuously raises interest rates to combat inflation. Thus, leading to a stronger U.S. dollar which makes nickel more expensive for buyers in other currencies.

Which variables impact the price of nickel?

• Supply Dynamics
• Weak Demand from China
• Rising Interest Rates
• Building Surplus Inputs
• Global Economy

Where does nickel come from?

Swedish chemist Axel Fredrik Cronstedt discovered nickel in 1751. Initially, Cronstedt investigated kupfernickel, another mineral that they thought contained copper. However, he was unable to extract any copper from the mineral and instead discovered a new metal.

Cronstedt named the new metal nickel after the German word for “rascal” or “devil” as miners struggling to extract copper from kupfernickel were unsuccessful and they believed that the mineral was ‘cursed’.

However, his discovery was a breakthrough in chemistry. It was the first time that nickel had been isolated as a pure metal. Additionally, his work paved the way for the development of new nickel alloys such as stainless steel.

Nickel processing is the process of extracting nickel from its ores and refining it into a pure metal. Nickel ores are typically sulfide or oxide ores.

Sulfide ores are more common and contain nickel in the form of nickel sulfide minerals. Oxide ores are less common and contain nickel in the form of nickel oxide minerals.

1. Crushing and Grinding – The ore is crushed and ground to separate the nickel sulfide minerals from the gangue minerals.

2. Flotation – Flotation is a technique that uses air bubbles to separate the nickel sulfide minerals from the gangue minerals.

The nickel sulfide minerals are hydrophilic (water-loving) and stick to the air bubbles while the gangue minerals are hydrophobic (water-hating) and do not attach to the air bubbles. The air bubbles are floated to the surface of a tank and the nickel sulfide minerals are collected.

3. Smelting – The nickel sulfide concentrate is smelted to produce nickel matte. Nickel matte is a mixture of nickel sulfide and iron sulfide.

4. Converting – Using the blowing machine, the air flows through the nickel matte which oxidizes the iron sulfide to iron oxide. The iron oxide then combines with the gangue minerals to form slag. The slag is separated from the nickel metal and the nickel metal is refined.

5. Crushing and Grinding – This process is similar to sulfide ores, the grinding machine crushes and grounds the ores to separate the nickel oxide minerals from the gangue minerals.

6. Hydrometallurgical Processing – This method uses chemical solutions to extract the nickel oxide minerals from the gangue minerals. Then, they are dissolved in the chemical solution and the gangue minerals are not dissolved. The nickel solution is separated from the gangue minerals and the nickel is precipitated from the solution.

7. Refining – The precipitated nickel is heated in a furnace. When the nickel melts, it means impurities are removed. The molten nickel is cast into other shapes.

What are the uses of nickel?

Coins – While most of us use credit cards for money transactions, coins still make a statement. Shiny-colored coins constitute 25% of nickel.

Stainless steel – The production of stainless steel becomes even stronger with the incorporation of 8-10% of nickel.

Batteries – The two most commonly used types of batteries, Nickel Cobalt Aluminium (NCA) and Nickel Manganese Cobalt (NMC) use 33% of nickel. Additionally, Li-ion battery production relies mostly on nickel.

Presently, this highly volatile metal comes from Indonesia, the Philippines, Russia, New Caledonia, and Australia.

What is the future price of nickel?

While nickel prices are expected to increase this year, experts are also cautious of the commodity’s healthy production. The Indonesian output showed no signs of any disruptions. However, Australian operators who struggled with high production costs laid off some workers to recover some losses.

On the other hand, the increasing demand for EVs can certainly power the production of batteries, which is a big consumer of nickel. While the Chinese economic recovery remains uncertain due to some compounding factors, its EV industry gradually dominates the global sales of electric cars.

Thus, this can potentially revive nickel prices if purchasing continues on a positive note. Thus, market analysts predicted a bearish market price of $21,000 per ton in 2030.