Nickel: Turbulent times for the important stainless steel raw material
Nickel, an indispensable raw material for three quarters of the annual global stainless steel production, has experienced turbulent times in 2022. It has already been popular as an attractive speculation object for some time. Which in March 2022 led to the tonne of nickel being chased up to around USD 100,000 per tonne in a speculation deal gone wrong, leaving a hole of almost USD 8 billion in the petty cash of a major Chinese stainless steel producer.
Nickel resists artificial pressure
Since then, attempts have been made to push nickel back down in price. Once by suspending and limiting trading on the London Metal Exchange (LME) after the March event. And later in the year, there has been no shortage of headlines to suggest that nickel is in surplus. Apart from a few manageable volatile reactions in the market, the nickel price has been moving steadily upwards since mid-July 2022 not only on the European commodity exchange LME, but also on the Shanghai Future Exchange in China. Official inventories are low on both trading venues and have fallen by more than 50% since January on the LME, for example.
Loss of confidence and low availability
This is partly due to the loss of confidence in nickel trading on the London Commodity Exchange, but also to availability. One of the world’s major producers has failed to expand its production, let alone raise it to 2019 levels, after significant production shortfalls in 2020 and 2021. Even if attempts are made to make this look good. Additional production capacity in Indonesia has only started this year and whether this can compensate for the missing Russian production volumes remains to be seen. Especially in terms of quality.
New nickel rally?
The very exciting rally in nickel contracts that began towards the end of October cannot yet be assessed conclusively. However, the price increase of almost 36% by 15 November 2022 is another prime example of how press reports, rumours and speculation in this commodity segment are used to bet on and influence rising or falling prices. It is enough to look back to the spring of 2021, when the Chinese company mentioned above briefly caused the market to plummet with a press release about the production of nickel matte for vehicle batteries.
Competition between stainless steel and batteries is growing
Another current challenge for the nickel processing industry is the increase in demand, among others from the battery industry, which is increasingly becoming a competitor for stainless steel producers. Moreover, as the Indonesian government has had to admit this year, the nickel reserves there are limited and if the exploitation of nickel continues as intensively as before, the valuable deposits are likely to run out soon.
The Indonesian government has therefore been thinking aloud for some time about introducing a nickel export tax, as the export ban at the behest of the European Union is likely to be classified as illegal by the WTO in the foreseeable future.
With the further development of populous countries such as India and China, with several billion consumers and a massive economic need to catch up with western industrial nations, the demand for the raw material is likely to increase further, not only with regard to stainless steel.
Our focus
Your benefits
- You save time, effort and costs - through our many years of extensive experience in sourcing
- You can concentrate more on your core business again - through the high quality standards of the Gerber Group
- More opportunities for your sales team - through our wide network of possibilities
Author: Thorsten Gerber
- In the steel business for more than 20 years
- Clients in the field of service centres, wholesalers and distributors
- Gerber Group trades more than 30,000 tonnes per year
Get in touch
You would like to talk to about stainless steel and nickel? Then please feel free to contact us.
Call: +49 7642 9282851
Mail: nickel@gerbersteel.com
Are known nickel reserves sufficient?
In the face of climate change and the need to switch to alternative energies, nickel has gained massive importance as a battery metal. The data currently freely available show that the world could run out of nickel by the end of this decade with the currently known raw material reserves and the necessary expansion of production.
Battle for secondary raw materials gets tougher
This is a good indication why the European steel producers, among others, are lobbying so vehemently for the introduction of an export ban on steel and stainless steel scrap and are themselves already pointing to the finite nature of nickel.
Without scrap, no more free ETS certificates
This is because green hydrogen and CO2-neutrally produced Direct Reduced Iron (DRI), which are named as two of the three important raw materials for the green transformation in steel production in the electric arc furnace (EAF), are only available in homeopathic quantities. The third raw material, scrap, is therefore the guarantor in the short and medium term for operating the EAF of stainless steel producers at all in line with the increasingly strict EU benchmarks for the free allocation of ETS allowances. This does not even take into account the drastically increasing energy demand for EAF, hydrogen electrolysers and DRI production.
Nickel as the new fuel - what's coming in 2023?
Nickel is therefore increasingly becoming the new oil or natural gas and the fuel for the green transformation in steel production, and scrap or stainless steel scrap is thus becoming a hard currency. In conclusion, there is a lot of exciting potential for the price development of nickel and also for stainless steel not only in the coming year 2023.
Gerber Steel South-West
P: +49 7642 9282851
M: sales@gerber-steel.com
Großherzog-Leopold-Platz 2
79359 Riegel
Baden-Wurttemberg, Germany
Gerber Steel South-East
P: +49 7642 9282851
M: sales@gerber-steel.com
Brunhamstraße 21
81249 Munich
Bavaria, Germany
Gerber Steel North-West
P: +49 7642 9282851
M: sales@gerber-steel.com
Sachsenring 11
27711 Osterholz-Scharmbeck
Lower Saxony, Germany
Gerber Steel North America
P: +1 302 803 5865
M: sales@gerbersteel-us.com
W: gerbersteel-us.com