Nickel enters new phase in 1991

This year could mark the beginning of a new phase for nickel after the record price levels and supply shortfalls of recent years, according to Nickel 1991, a report from market analyst Roskill of London.

The report says that growth in demand for primary nickel, which was strong throughout the 1980s, is now slowing down as recessions start to affect many major nickel consumers.

New production capacity, which was stimulated by the recovery of nickel prices in 1987 and 1988, now threatens to tip the balance into slight oversupply, unless nickel producers reduce their output.

As ever, the greatest influence on nickel markets in the 1990s will be exerted by stainless steel production, which is widely believed to show a cyclical growth and correlates strongly with world nickel consumption.

The stainless steel market accounted for more than 60% of the total nickel consumption of market economy countries (MEC) in 1989, finding major markets in the transport, energy, chemical processing and consumer goods industries.

While the stainless steel market is expected to continue to dominate consumption between 1990 and 2000, Roskill says growth markets will be found in superalloys, non-ferrous alloys and batteries.

The strong underlying growth in commercial aircraft applications for superalloys has led to predictions of a 27% growth in the U.S. market between 1987 and 1994. Other non-ferrous alloys are expected to benefit from increasing use of pollution control equipment as environmental considerations continue to be important throughout the 1990s.

Outside the metallurgical applications sector, the main area of growth for nickel consumption is expected to lie in batteries. The report says that during the first eight months of 1990, nickel-cadmium battery production increased by 10% compared with the same period of 1989.

Consumption of nickel in other types of storage battery is also expected to increase following the first commercial manufacture of a nickel-hydrogen storage battery in 1990 and the development of a new nickel-zinc fuel battery for electric vehicles.

The report examines the recent ups and downs of the nickel industry: the dramatic price increase in 1988 which revitalized the industry, the sudden shortfall that followed, the resulting expansion in production capacity and the current position of falling prices and slower growth in demand.

Until 1992, this expansion in capacity, in combination with economic recession, may result in a slight nickel surplus which could cause sharp declines in nickel prices, according to Roskill. However, world stocks remain relatively low and the market could be vulnerable to unforeseen supply disruption; this was demonstrated in the first quarter of 1991 when supplies from the Soviet Union became erratic.