Overview: What is nickel worth?
The current LME price of nickel (mid-March 2002) is US$6,650/tonne. This is a rebound since a low of US$4,440 in November 2001, but is nowhere near the peak of US$10,660 in March 2000. Nickel will be in short supply again, according to Inco’s executive vice-president of marketing, Peter Goudie, “when the world fully recovers from the economic downturn we’ve just gone through.”
The demand for nickel depends on the growth rate of industrial production. Nickel is very well spread across the different parts of the economy; stainless steel, which accounts for two-thirds of all nickel produced, goes into a large range of industrial activities.
“We can fairly reliably predict the available supply in the next four years,” says Goudie, “If nickel was to grow at the long-term trend growth rate of 4%, you would begin to see a significant shortage in the market starting in the second half of 2003; certainly the market will have shortages in 2004 and 2005. (Bear in mind that the nickel consumers have run their inventories down to almost nothing.) I think the price of nickel will improve before we get to that point. The price of nickel is influenced by what people believe is going to happen, and therefore reacts before there is a shortage of supply.”