Two-thirds of all nickel mined and produced globally will make its way into the production of stainless steel, therefore, the viability of the worldwide nickel market is heavily dependent upon stainless steel production. In turn, the pricing of stainless steel is also dependent on the market prices of worldwide nickel.
Nickel prices have been experiencing overall decline in the past year. Analysts say the fall is mostly in-line with a weakening trend in the base metals pack at the London Metal Exchange (LME) after China devalued its exchange rate in a move that helps exports and makes imports more expensive for the world’s biggest producer and consumer of metals.
Many traders and analysts think the long decline in nickel’s price is reaching an end, however, as China’s drive to produce more of a substitute product, nickel pig iron (NPI), shows signs of cracking. This is in part due to China’s decreasing stockpile of nickel ore, due to an Indonesian export ban, in addition to antipollution laws in China forcing low-grade NPI producers to close. Add to this the expected rise in global stainless steel production, and the conditions for a resurgence in nickel prices appear eminent.