Nickel
Nickel is a metal with a bright future as it is the main alloying metal needed to produce certain types of stainless steel. The strength and life span of products built with stainless steel is vastly superior to similar products built with non-stainless steels.

Applications Nickel's primary use (65%) is in the manufacturing of stainless steels, with a further 20% of nickel consumption being used to produce other steel and non-ferous alloys, including super alloys. 9% of nickel is used in electro-plating with about 6% being used in coins and nickel chemicals. Demand for stainless steel took off in the mid-1980's, especially in the chemical engineering, paper and food processing industries, where stainless steels high melting point, high resistance to corrosion and oxidation, and strength, made it invaluable as it could withstand the heat, chemicals, acids and pressures that these industrial processes require. Stainless steel is also used in construction and household items such as kitchen sinks, pots, pans and utensils and work surfaces. Nickel is also used to produce super-alloys which are used extensively in the aerospace industries.
Nickel is used in the electronics industry and within this industry a significant growth areas has been mobile technology. Mobile phones, computers, digital cameras etc all need small, lightweight high capacity power sources and nickel cadmium and other nickel alloys have been used to produce some of these batteries.

Demand
Nickel, or more to the point stainless steel, is a relatively new metal and its use has grown significantly as Asia and China have built up their infrastructure. Much of the West's infrastructure was built before stainless steel was a popular building material. Growth in nickel demand is expected to come primarily from further growth in stainless steel. However the nickel market needs to be careful that it does not out price itself. In 2004, high nickel prices started to see some stainless steel producers switch from producing high nickel based stainless steels (austenitic stainless steels, or 300 series) to low nickel based stainless steels, (200 series).

Supply
Nickel occurs as oxides, sulphides and silicates, with nickel ores mined in about 20 countries and smelted or refined in about 25 countries. Primary nickel is produced and used in the form of ferro-nickel, nickel oxides and other chemicals, and as more or less pure nickel metal. Nickel is also readily recycled in many of its applications, and large tonnages of secondary or "scrap" nickel are used to supplement newly mined metal.
Nickel production has for a long time been in the hands of only a few large producers, with the largest producer base in Russia. The combination of a small producer base and the lack of transparacy of having the largest producer based in Russia, has meant that nickel supply has at times been volatile. A strike at a producer can quickly tighten supply. Likewise unclear and secretive production and shipping schedules combined with ever changing export and tax legislation in Russia, can have a big impact on market sentiment.
Although nickel is concentrated in the hands of a few producers its geographical production base is quite evenly spread, with 29% produced in the former eastern bloc, 21% produced in the Americas, 16% in Europe, 15% in Australia, 14% in Asia and 5% in Africa.
Western world nickel supply has risen from around 450,000 tonnes in 1982, to around 885,000 tonnes in 2004, although total world production, including Cuba, Russia and China is nearer 1,280,000 tonnes.

LME Nickel Futures Contract Specification

LME Nickel Options Contract Specification

LME Nickel Traded Average Price Options Contract Specification

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