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Nickel is present in over 3000 different alloys that are used in over 300,000 products for consumer, industrial, military, transport/aerospace, marine and architectural applications.
Nickel’s biggest use, about 65 percent, is in alloying – particularly with chromium and other metals to produce stainless and heat-resisting steels. Its primary function is to stabilize the austenitic (face-centered cubic crystal) structure of the steel. Normal carbon steel will, on cooling, transform from an austenite structure to a mixture of ferrite and cementite.
When added to stainless steel nickel stops this transformation keeping the material fully austenite on cooling. Austenitic stainless steels have high ductility, low yield stress and high tensile strength when compared to carbon steel – aluminum and copper are examples of other metals with the austenitic structure.
Another 20 percent is used in other steels, non-ferrous alloys (mixed with metals other than steel) and super alloys (metal mixtures designed to withstand extremely high temperatures and/or pressures or have high electrical conductivity) often for highly specialized industrial, aerospace and military applications.
About nine percent is used in plating to slow down corrosion and six percent for other uses, including coins, electronics, in batteries for portable equipment and hybrid cars, as a catalyst for certain chemical reactions and as a colorant – nickel is added to glass to give it a green color. In many of these applications there is no substitute for nickel without reducing performance or increasing cost.
Opportunity is knocking
Many analysts are saying the nickel market is over supplied and London Metal Exchange warehouses are seemingly reaching record levels every day. The nickel story is dead and buried, move on and make your money elsewhere…right? Wrong.
Here at aheadoftheherd.com we KNOW the nickel story is alive and well and just getting started. Nickel is presenting a huge profit opportunity in this author’s opinion.
Read on to find out why.
Action & Reaction
Indonesia’s President Yudhoyono prohibited ore exports from Southeast Asia’s largest economy in January. Yudhoyono is betting that investment and higher prices will more than offset job cuts and lost revenue from unprocessed ore shipments.
Nickel rallied as much as 56 percent on the ban, climbing to $21,625 a tonne in May.
The reaction was swift, money poured into the country…mostly Chinese investors planning to build at least 30 nickel smelters that will process about 20 million tons of ore when they start production – supposedly in 2017.
Nickel prices have severely come off their high and are currently below $17,000.00 a ton. Why?
Four factors are driving the price decline:
Concern that the Indonesian ban will be softened.
Rising refined LME inventories.
Philippines will not implement a ban on exports of nickel yet.
Slowing Chinese usage
Investments in smelters, processing plants and accompanying infrastructure have reached a frantic US$4.9 billion so far this year. Indonesia’s Energy and Mineral Resources Ministry has categorically stated the ban on ore exports will remain in place as the curbs will spur as much as $13 billion more in investments by 2017. All political opposition parties are in full agreement.
“It’s important to maintain the policy. Investors have made it clear to the government that they don’t want any change in policy because it could damage all their investments and they would lose trust.” R. Sukhyar, director general of mineral and coal.
The rise in high quality refined nickel LME stocks is important – it’s a widely followed metric that’s very misleading.
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