Special Research Report On Nickel

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SPECIAL REPORT ON NICKEL (MCX)


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COMMODITY RESEARCH DESK
Details about Nickel:
Nickel is a natural element obtained from the core of the earth. It has silver white
colour with a shining base and golden tint in it. Nickel is said to be useful for its
properties of being ductile and corrosion resistant. Nickel is extracted from two ores
magmatic sulfides and laterites. It is a corrosion-resistant metal & its alloys
contributes to many aspects of modern life & so its demand is sustainable for many
years.
General Uses of Nickel:
Nickel is widely used in making alloys apart from its use in transport, aerospace,
marine, architectural and consumer applications. In particular it is used for making
utensils, coins, magnets and other metals. It is specifically used for plating and that
plating polish is called German silver. Stainless steel is the most important alloy of
nickel which is further used in making utensils, equipments, chemical plants and
food processing units as shown in the pie chart....


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Industrial Uses & Consumption of Nickel:


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Major Producers of Nickel:

Nickel production
Strong world economic growth until 2007 supported rising production of primary
nickel metal. In 2007 world primary production stood at 1.416 million tonnes.
However, the economic crisis led to lower worldwide nickel production in the
period 2008 to 2009 and production of primary metal declined to 1.32 million
tonnes in the latter year. Production rapidly recovered in 2010 to 1.446 million
tonnes and increased further to 1.589 million tonnes in 2011. On an annual average


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the growth in production between 2001 and 2011 was 3.7%. A new product started
to be produced in China in 2005 and that was Nickel Pig Iron (NPI) in different forms
and grades. Production increased slowly in the first few years but in 2010
production was estimated at over 160,000 tonnes and in 2011 production could be
has high as around 250,000 tonnes.


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Demand and Supply Chart of Nickel:


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Fundamental reasons for Nickles Price rally:
Nickel Rally Accelerates on Indonesian Nickel Ore ban & New Caledonia Supply
Disruption
In January, Indonesia implemented an export ban on mineral ore including Nickel ore
which has tightened supplies from the worlds leading producer.
The conflict between Ukraine & Russia has led to concern that Internation sanctions
could affects Russias Nickel export.
Recently, disruption of production in Goro Nickel operations in New Caledonia has
put further strong pressure on Nickels price.
Description:
Closure by Vale SA, worlds second biggest Nickel producer in New Caledonia is the
most recent addition to the list of supply disruptions that has hampered the nickel
market since the beginning of the year. New Caledonia is currently the worlds sixth-
largest nickel producer. The plant closure was not planned but has to shut down
because of result of a spillage of acid containing solution.
The significant supply concerns led the Nickel prices to surge. The Nickel price has
increased by more than 45% since the beginning of the year & now reached the
highest level since early 2012, closed to USD $22,000/mt. furthermore, the strong
nickel rally has gained some support from the recent Chinese stabilisng economical
indications & chinas demand for the commodity.
If the suppy disruption in New Caledonia is solved quickly, we could see a short term
correction in the nickels price. The same goes for an easing of tension between
Ukraine & Russia (what is currently priced in the nickel market).
However, the supply tightening in Indonesia is likely to be felt for sometimeto come. In
combination with furthe stabilisation in China & gradual recovery in global economy,
further upside potential for nickel prices on a medium-term horizon can be expected.


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