British metal and mining professional market consulting firm RoskillConsultingGroupLtd recently said that after three consecutive years of shrinking, nickel metal demand will pick up in 2010.
The aftermath of the financial crisis, one of the impacts on the world economy, is the fierce turmoil in nickel prices. In May 2007, nickel market demand was strong, and the London Metal Exchange (LME) nickel price had surged more than $52,000 per ton. However, at the end of 2008, prices fell by more than 80% due to sluggish demand. In the fourth quarter of 2009, prices rose to $18,500 per ton.
The main reason for the decline in nickel metal prices is that the demand is declining. In the first nine months of 2009, due to the commitment of merchants to reduce inventory, the world's nickel consumption level dropped by 9%. The output of nickel metal also fell sharply. In the first three quarters of 2009, nickel ore production fell 18% year-on-year. Producers responded quickly to the reduction in demand. In the first half of 2009, there was almost a whole season, and nickel ore production was in a state of suspension.
The growth of the overall nickel metal market is very strong. Between 2000 and 2006, demand reached its peak, and global nickel consumption increased at a rate of 3.8% per year. In the situation of growing demand in the world, especially China has grown the fastest. Between 2000 and 2009, the demand for nickel metal in China was estimated to have grown by nearly 25% per year.
This remarkable growth momentum has made China the world's largest consumer of nickel. In 1995, China accounted for only 4% of global nickel consumption, and in 2008 it soared to nearly 30%.
The demand for nickel metal is mainly driven by stainless steel production, accounting for about 2/3 of the total nickel consumption. Stainless steel crude steel production began to decrease in the third quarter of 2007, and production in 2008 was reduced by 7% from the previous year. In the first three quarters of 2009, the annual shrinkage of stainless steel crude steel production reached 15%.
However, the reduction in stainless steel production has only occurred in developed countries. In emerging markets such as China and India, domestic output is increasing. In the first three quarters of 2009, China's annual output rose by nearly 20%. During the whole year of 2009, China's stainless steel production was estimated to be 8-9 million metric tons.
Roskill pointed out that although global nickel demand has been decreasing for three consecutive years, nickel consumption is expected to rise with this year's global economic recovery. Roskill expects nickel consumption to increase by about 7% this year.
The rise in demand for stainless steel sheets in the next few years is also the reason for the increase in nickel consumption. It is estimated that this year's stainless steel production will increase by 8% to 27 million metric tons per year, while in 2011 it will see 30 million metric tons.
Based on the nickel demand forecast for 2010-2012, nickel metal prices are expected to remain stable. This year's annual average nickel price is estimated to be about $20,000 per metric ton and will continue to grow upwards between 2011 and 2012. The average nickel price between 2010 and 2012 is expected to exceed $22,000 per metric ton.
The aftermath of the financial crisis, one of the impacts on the world economy, is the fierce turmoil in nickel prices. In May 2007, nickel market demand was strong, and the London Metal Exchange (LME) nickel price had surged more than $52,000 per ton. However, at the end of 2008, prices fell by more than 80% due to sluggish demand. In the fourth quarter of 2009, prices rose to $18,500 per ton.
The main reason for the decline in nickel metal prices is that the demand is declining. In the first nine months of 2009, due to the commitment of merchants to reduce inventory, the world's nickel consumption level dropped by 9%. The output of nickel metal also fell sharply. In the first three quarters of 2009, nickel ore production fell 18% year-on-year. Producers responded quickly to the reduction in demand. In the first half of 2009, there was almost a whole season, and nickel ore production was in a state of suspension.
The growth of the overall nickel metal market is very strong. Between 2000 and 2006, demand reached its peak, and global nickel consumption increased at a rate of 3.8% per year. In the situation of growing demand in the world, especially China has grown the fastest. Between 2000 and 2009, the demand for nickel metal in China was estimated to have grown by nearly 25% per year.
This remarkable growth momentum has made China the world's largest consumer of nickel. In 1995, China accounted for only 4% of global nickel consumption, and in 2008 it soared to nearly 30%.
The demand for nickel metal is mainly driven by stainless steel production, accounting for about 2/3 of the total nickel consumption. Stainless steel crude steel production began to decrease in the third quarter of 2007, and production in 2008 was reduced by 7% from the previous year. In the first three quarters of 2009, the annual shrinkage of stainless steel crude steel production reached 15%.
However, the reduction in stainless steel production has only occurred in developed countries. In emerging markets such as China and India, domestic output is increasing. In the first three quarters of 2009, China's annual output rose by nearly 20%. During the whole year of 2009, China's stainless steel production was estimated to be 8-9 million metric tons.
Roskill pointed out that although global nickel demand has been decreasing for three consecutive years, nickel consumption is expected to rise with this year's global economic recovery. Roskill expects nickel consumption to increase by about 7% this year.
The rise in demand for stainless steel sheets in the next few years is also the reason for the increase in nickel consumption. It is estimated that this year's stainless steel production will increase by 8% to 27 million metric tons per year, while in 2011 it will see 30 million metric tons.
Based on the nickel demand forecast for 2010-2012, nickel metal prices are expected to remain stable. This year's annual average nickel price is estimated to be about $20,000 per metric ton and will continue to grow upwards between 2011 and 2012. The average nickel price between 2010 and 2012 is expected to exceed $22,000 per metric ton.
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