With its high melting point and corrosion resistance, nickel is a diversely used metal. Nickel could be found from over 300,000 products, from daily used coins to aerospace application. In the present article, Censere examines the structure of global nickel market and market dynamic in the Asia Pacific Region. 

Asia Pacific Region Nickel Outputs Accounts for more than half of the World’s Production

It is estimated that the total nickel reserves in the world is 75 million tonnes with major reserves is located at Asia Pacific Region. The two largest holders of nickel reserves are Australia and New Caledonia; their reserves are 20 million tonnes and 12 million tonnes respectively. In 2012, the world total mine production of nickel was 2.1 million tonnes, and the Philippines was the largest nickel producer in the year. In the Asia Pacific Region, Australia, China, Indonesia, New Caledonia and the Philippines, produced 54.6% of mine production of nickel and held 51.4% of nickel reserves in the world. 

Most Nickel is Used to Produce Alloys

It is estimated that 81.5% of nickel is first used to produce alloys, and 65% is consumed in the production of stainless steel. Among other alloys, 3.9% nickel is used for producing super alloys. Apart from alloy sector, electroplating (8.3%) and chemical (4.3%) industries also consumed a significant amount of nickel. Projected by Roskill, the growth in consumption of nickel alloy will be increased by 3.3% from 2012 to 2020. Among a variety of industry, the growth of consumption rate for chemical/process industry (4.3%) and electronic/appliances (4.8%) will be above the average.  

According to International Nickel Study Group (INSG), total primary consumption of nickel increased from 1.70 million tonnes in 2007 to 1.99 million tonnes in 2012, with a 3.16% compound annual growth rate. In the same period, while all other regions recovered slowly from the global financial crisis, demand for nickel consumption grew fast in Asia. In 2012, Asia consumed 1.10 million tonnes of nickel, accounted for 55.2% of the world’s total consumption. In country level, China was the largest consumer and consumed more than 0.7 million tonnes of nickel. Its consumption was even larger than the sum total of European Union. This figure is not surprising because China is the largest stainless steel producer in the world and producing higher than 40% of the world’s crude steel output yearly since 2011. 

Dynamics of the Nickel Market

Indonesia and Philippines are largest exporters of Nickel Ores and Concentrates

From 2008 to 2012, the volume of global nickel ores and concentrates export increased from around 19 million tonnes to around 79 million tonnes (TradeData International), with a 42.8% compound annual growth rate. Indonesia and Philippines are the two dominating nickel ores and concentrates exporters in the world. Other major exporting countries include Australia, Canada and Russia. Although Australian exports volume is much smaller than Indonesia and Philippines, its export value per unit is much higher. Indonesia and Philippines mainly export nickel ores which sells at a lower price. In the period of Jan-Nov 2013, the average exporting prices of Indonesian exports was around USD26.5/tonne and the total value was USD1,491.5 million. The total value of Philippines exports in 2012 was USD670.7 million, up 32.7% from the previous year. On the other hand, Australia primarily sells nickel concentrates with an average price over USD2,000/tonne. The export value of Australia increased from USD1202.1 million in FY2006 to USD2045.7 million in FY2013.

Since Indonesia’s ban on raw-mineral exports (including nickel) took effect on 12 January 2014, the price of Nickel jumped to a two-year record high price of USD21,625 in May. However, since then, the price has plunged in the past five months. The trigger for the price drop was the warehousing scandal at Qingdao port in China. It was found that there was a stockpile of dark inventory of nickel in Qingdao port. As a result of the export ban, the Philippines replaced Indonesia as the largest nickel ore supplier to China in 2014. 

The Philippines and Malaysia are Major Nickel Suppliers to China

Being the largest consumer of nickel, China needs to import a huge amount of nickel to accommodate its demand. Philippines and Malaysia are the two largest nickel ores and concentrates suppliers to China; they aggregately contributed to more than 90% of China’s nickel ores and concentrates import. At the same time, China absorbs a majority of nickel ores and concentrates export from these two countries. Australia has also become a more important supplier of nickel ores and concentrates to China in the past 6 years. From FY2006 to FY2013, the value of exports shipped to China increased from USD134.3 million to USD959.6 million.

Nickel Pig Iron –a Potential Solution to China’s Increasing Nickel Demand

Nickel Pig Iron (NPI), a low grade ferronickel, is a cheaper substitute to pure nickel for stainless steel production because its nickel content is lower than other ferronickel. International Nickel Study Group acclaimed the invention of NPI as a one of the most important changes in the nickel market. China’s NPI production blasted off in 2007 (around 80,000 tonnes) and reached the level around 275,000 tonnes (Hatch) in 2011. Meanwhile, the London Metal Exchange (LME) nickel price dropped gradually since 2007. On one hand, the availability of NPI production might affect the global nickel price. On the other hand, its production is reliant on overseas supply because imported low grade nickel ore from Indonesia and Vietnam are major raw material for NPI production.