Nickel is a silver metal with a slight golden tinge with the symbol Ni and is atomic number 28. Nickel occurs mostly in combination with sulfur and iron. The commodity Nickel can only be economically mined from two types of ore deposits, the first one being laterites and the second being magmatic sulfide.
Australia and New Caledonia are considered to have the largest remaining reserves while Russia is the biggest producers with about 20% of worldwide production. There is currently 1.4 million tonnes of new or primary nickel produced and used throughout the world.
The first use of nickel can be traced back to 20 BC with certainty. However there are Chinese documents describing a white copper which could very well be nickel, dating back to 1700 BC. Its traces can be found in coins and weapons. Nickel was discovered by Axel von Cronstedt, who believed he was extracting copper but instead found a silver-white metal which he named nickel. Initially nickel could only be extracted from the very rare Kupfernickel but later on it would be obtained as a by-product from cobalt blue production.
Production of the commodity nickel
The making of nickel is a process which involves a number of steps:
Nickel mined from lateritic ore is mined from various depths beneath the surface using large earth-moving equipment. The other nickel containing type of ore, sulfidic ore, is usually found in combination with copper ore and is mined underground.
Nickel from lateritic ore is extracted trough extractive metallurgy. It is extracted from its ores trough a conventional roasting method which removes the moisture from the ore. Next the nickel oxide is removed by reduction furnace which also greatly reduces the chemical bound water. Resulting in a 75% pure form of nickel.
The extraction of nickel from the sulfidic ore requires a different method. Current methods include both flash and electric smelting. The ore is placed in the furnace which already contains pre-heated oxygen. This smelting process will cause the iron and sulfide to oxidize resulting in 45% nickel. During the final step oxygen is injected in the molten bath, which will eliminate any of the remaining traces of iron and sulfide.
After the mining and processing of either the lateritic ore or sulfidic ore there remains nickel matte. Through further refining a 95% pure nickel can be obtained by using the fluid bed roasting technique.
The use of electric cells allows for a better refining process. The electrical cells equipped with inert cathodes removes the final impurities from the nickel, resulting in a high quality nickel. This refining process is quickly becoming the standard method in the industry.
Nickel is most commonly used as an alloy with either iron or copper (about 90% of nickel is used in alloys). It is used for its defining characteristics such as: high resistance against corrosion, better strength at high and low temperatures, and a range of special magnetic and electronic properties.
The alloy of nickel, iron and chromium is the most common alloy, which is used to create stainless steel. This type of steel can be found in every aspect of daily life. From household appliances such as washing machines, microwaves and cutlery. While it is also used in many industrial applications such as ships, cars, medical equipment, plumbing appliances and countless other uses.
An alloy of iron and nickel is primarily used in electronics and specific engineering for its conductive and protective properties. The nickel-copper alloy is most frequently used in coinage and marine engineering, for its high corrosion resistance.
Nickel containing product tend to have a very long life-span, which makes it a highly favorable metal as it is very cost-effective. Furthermore an enormous portion of the nickel used in the world is being recycled, making it an even more profitable type of metal and considered environmental friendly.
Trading of the commodity nickel
Trading of nickel takes place primarily on the London Metal Exchange (LME), similar to many of the other metals. Prices of this exchange are used as a benchmark for the pricing of contracts and their historical price curve can provide some insight into possible future prices.
The growth of economies across the globe causes a significant increased demand for stainless steel. Stainless steel is a widely used material, especially in developing economies, and nickel being an important component in the production of stainless steel is therefore seeing a similar increasing demand.
Globalization is also a factor greatly influencing the price for the commodity nickel. With the international dependence due to mining locations and production facilities of nickel, global events will have an impact on price discovery. Governmental regulations and international tensions between countries can have a far-reaching effect on the supply and thus price of nickel. The limited availability of mining locations also creates a highly dependent market with the few mining countries.
Substitutes can have a significant impact on the prices of nickel. During the 2007 crisis low grade nickel was used to produce so-called pig iron steel, which is of lower quality but much cheaper. This type of substitute is only profitable at a certain price. When nickel reaches said price, it will stabilize due to the availability of a substitute.
LME Nickel Futures Contract
|Contract Size||6 metric tons|
|Price Quotation||U.S. Dollars and Cents per ton|
|Contract Months||Monthly out to 27 months|
|Tick Size||$1.00 per ton|
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