For most people who aren’t interested in chemistry or manufacturing, nickel doesn’t really mean all that much. Isn’t it just 5 cents in value? But the truth of the matter is that this metal is widely used in society today. While it is used in the nickel coin (which is actually just 25% nickel and 75% copper), it is also used in buildings, transport, electrical power generation, medical equipment, food preparation, and mobile phones. It’s just about everywhere.
In fact, it’s one of the oldest metals known to man. People have used it for more than 5,000 years although they probably weren’t aware of it at the time. It was only in medieval times in Germany that people suspected its existence, when they were unable to extract copper from a red ore they found. They blamed a mythological sprite named Nickel, (which is like Old Nick, or the devil) and they called the ore Kupfernickel as “kupfer” is copper in German.
Then in 1751, a baron in Sweden tried to extract copper from kupfernickel, and instead produced a white metal. This he named nickel.
Below is the historical Nickel price per metric ton.
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Price History of Nickel
Demand for nickel increased when it started being used in steel production in 1889. During the non-war years it was used extensively for coins. But during WW II it was no longer used for coins because the metal was crucial in the production of armor.
Nickel prices are known for its high volatility, and it has exhibited a boom/bust cycle through the years. It boomed in the 1960s and 1970s, but prices have dropped considerably since then.
Its decline in prices has been noticeable in recent weeks, because prices of copper and aluminum have gone up from the depths reached during the global financial crisis. The problem is that while there is a lot of demand for nickel, the supply of the metal is too great. Too many regions have large stockpiles of the metal.
Yet despite the low price of the metal, major producers are still showing a profit for their efforts. This is partly because producing this metal requires very low energy costs. In addition, these producers are reluctant to cut down on their output because they’re afraid of losing market share to their competitors.
Some have hoarded the metal because of Indonesia’s decision in 2014 to cease exporting it, and some mining execs even thought it could reach $15 to $20 per pound by the middle of 2015. But it never did. Right now, the price is $3.97 per pound.
Indonesia is the 5th largest producer, with the top spots going to Russia, Canada, New Caledonia, and Australia. The US produces a measly 15,070 tons a year with its only mine in Oregon. In contrast, Russia produces 230,000 tons a year.
Nickel as Investment
If you’re bullish about this metal, you can use it as a hedge against the US dollar. You can even buy it in bars or bullion, but that’s not generally recommended. Its low value compared to its density means that you’ll have to spend too much for storage.
You can also trade futures contracts, in anticipation of a rise in the price. Or you can also invest in the stocks of companies that mine the metal. These companies can survive because they have generally low costs in producing this metal.
Purposes Used For
The main reason why so many people and organizations hoard and sell nickel is because it is used extensively in numerous industries. Essentially, it is part of stainless steel which is usually 8-12% nickel. That means it is part of an alloy, and 60% of the world’s supply is used as an alloy with steel. Another 14% is for an alloy with copper. A nickel coin is an example of this, as it is made of mostly copper with 25% nickel. It is very popular for steel and currency because it is highly resistant to corrosion.
Obviously, as part of stainless steel it is widely used. This material is used for just about everything, including household appliances, medical equipment, and heavy machinery. This material is used in the textile, pulp and paper, pharmaceutical, chemical, petroleum, and food and beverage industries.
It’s also used in superalloys, which contain titanium, aluminum, tungsten, chromium, iron and cobalt. These are extremely resistant to corrosion, and they still retain their properties even in very high temperatures.
It’s also used in electroplating, so that it a thin layer of nickel is laid on top of another layer of metal. For example, steel is strong but it can rust. But with nickel-plating, the nickel protects the steel from corrosion.
Finally, it is also used with cadmium to make batteries for various handheld tools and mobile devices.
The demand for nickel will not cease for the foreseeable future. It’s only because there’s an oversupply of the metal which has caused its price to stagnate. It’s inherent value to society, however, is undeniable.