How to become an nickel trader and is it a suitable career for the future?
This article is intended to give you a brief overview of the topic of nickel. We will explain what nickel is, how to become a nickel trader and will discuss if pursuing a career in this field might be worthwhile or not.
What is nickel? An overview and some facts.
Nickel is a naturally-occurring metallic element.
It occurs extensively in the earth’s crust and core. While the concentration of nickel in the earth’s crust is 80 parts per million, the earth’s core consists mainly of a nickel-iron alloy.
Nickel is the fifth-most common element on earth.
It even can be found in small quantities in plants, animals and seawater.
Nickel is a versatile element and will alloy with most metals.
Nickel increases the harden-ability of the material; few things are made of pure nickel. Instead, nickel plays a supportive and stabilizing role in industry materials. It is usually combined with other metals to produce stronger, shinier and more durable products. It is considered as a protective outer coating for softer metals.
Nickel’s outstanding physical and chemical properties
– High melting point 1453°C, boiling point 2730°C, curie temperature 253°C
– Resist corrosion and oxidation
– Highly ductile
– Alloys readily
– Magnetic at room temperature
– Can be deposited by electroplating
– Has catalytic properties
– Can be fully recycled
Nickel’s different quality grades
Primary nickel can be sorted into two major groups:
High-grade nickel
– Class 1 nickel production sees about 70 percent originating from sulfide ores, which are concentrated, smelted, and refined. The other 30 percent are from limonite ores, which are leached commonly using high-pressure acid leaching (HPAL).
– Cathodes, briquettes, carbonyl nickel and nickel compounds.
– 2020’s main producers of high-grade nickel were Nornickel, Jinchuan, Glencore, Vale, BHP and Sumitomo Metal Mining.
Low-grade nickel
– Class 2 nickel is produced from saprolites and limonites, which are popular for their use in the stainless-steel industry due to their iron content and potentially low production costs.
– Ferronickel, NPI and nickel oxide
– In 2020, the key producers of low-grade nickel included Chinese and Indonesian NPI smelters, as well as ferronickel producers such as Eramet, POSCO, Anglo American, Solway and South32.
The majority of finished nickel production is class 2 nickel.
With current trends, class 1 nickel is expected to be under supplied.
Benefits of nickel – why is it an interesting metal?
Among others, these are the main advantages of nickel, which are also the reason why nickel will continue to be a commodity in demand in the future:
- Formability
- Weldability
- Toughness
- High-temperature properties
- Corrosion resistance (current estimates indicate that $2.5 trillion in costs/damage are incurred annually worldwide due to corrosion)
- Ease of production
- Positive impact as improving energy efficiency
- Recyclable
- Magnetic at room temperature
- Broad range of applications (from nickel-steels, rechargeable batteries to electric guitar strings and microphone capsules)
Mining and refining nickel
Mining nickel
Nickel from lateritic ore is mined from various depths beneath the surface using large earth-moving equipment.
The other nickel containing type of ore, sulfidic ore, is usually found in combination with copper ore and is mined underground.
Nickel from lateritic ore is extracted through extractive metallurgy. It is extracted from its ores through a conventional roasting method which removes the moisture from the ore.
Next, the nickel oxide is removed by reduction furnace which also greatly reduces the chemical bound water resulting in a 75% pure form of nickel.
The extraction of nickel from the sulfidic ore requires a different method. Current methods include both flash and electric smelting. The ore is placed in the furnace which already contains pre-heated oxygen. This smelting process will cause the iron and sulfide to oxidize resulting in 45% nickel.
During the final step oxygen is injected in the molten bath, which will eliminate any of the remaining traces of iron and sulfide.
Source: https://www.agiboo.com/nickel
Refining nickel
After the mining and processing of either the lateritic ore or sulfidic ore there remains nickel matte (contains 25 to 45 percent nickel). Through further refining a 95% pure nickel can be obtained by using the fluid bed roasting technique.
The use of electric cells allows for a better refining process. The electrical cells equipped with inert cathodes remove the final impurities from the nickel, resulting in a high-quality nickel. This refining process is quickly becoming the standard method in the industry.
Source: https://www.agiboo.com/nickel
Mine production of nickel worldwide from 2010 to 2021 (in 1,000 metric tons)
Source: US Geological Survey; ID 160748
Distribution of mine production of nickel worldwide in 2020, by country
Source: INSG; NRCan
Mine production of nickel worldwide in 2020, by region (in 1,000 metric tons)
Recycling nickel
Nickel is a natural resource which cannot be consumed.
Like many other metals, nickel is fully recyclable. It can be recycled again and again without loss of quality, contributing to the Circular Economy (CE) model.
As nickel-containing products have value, there is an infrastructure for gathering and processing them. Gathering, sorting, preparing, transporting and using scrap metal generates significant employment and adds economic value.
The global nickel-related CO2 emissions are reduced by one third thanks to nickel recycling and the recycling rate is steadily increasing thanks to new technologies and more efficient processes (nickel end of life recycling rate in 2000: 63% vs. 68% in 2010).
57% of all mined nickel is still in use due to the long lifetime of the products.
How clean is the nickel industry?
ESG is becoming even more of a focus for investors, governments and companies every day, bringing up the question how clean the nickel industry really is.
Especially in the field of mining, the next few years and decades will not only see a general rethink, but also a lot of investments in order to make entire areas more environmentally friendly, more resource-efficient and less environmentally intrusive. Of course, this also offers interesting investment opportunities along the entire value chain .
Often, the conversion process is not only time-consuming, but also expensive. There are a number of sustainably factors to consider in order to produce clean nickel:
Nickel’s supply and demand
Nickel’s demand
Demand for nickel worldwide in 2019 and 2020, with estimated figures for 2021 and 2022 (in 1,000 tons)
Source: Norilsk Nickel
Global consumption of nickel from 2010 to 2020 (in 1,000 metric tons)
Source: Statista
First use of nickel
First use of nickel is defined as the conversion of nickel products into intermediate products and in almost all cases, these products undergo further processing.
– 72% – Stainless steel
– 7% – plating
– 7% – alloy steels & castings
– 7% – batteries
– 6% – Ni-base & Cu-base alloys
– 1% – other
End use of nickel
– 33% – engineering
– 23% – metal goods
– 16% – transport
– 14% – building & construction
– 9% – electronics
– 5% – others
Nickel’s importers
The world’s leading importers of nickel and nickel products in 2020, by country (in bn U.S. dollars)
Nickel’s supply
Supply of nickel worldwide in 2019 and 2020, with estimated figures for 2021 and 2022 (in 1,000 metric tons)
Nickel’s exporters
The world’s leading exporters of nickel and nickel products in 2020, by country (in bn U.S. dollars)
Source: Norilsk Nickel
Nickel’s reserves
The world’s leading exporters of nickel and nickel products in 2020, by county (in bn U.S. dollars)
Source: Statista
Reserves of nickel worldwide as of 2021, by country (in million metric tons)
Nickel’s main drivers
There are several market drivers leading to increasing nickel’s demand in the future:
– Growing popularity of electric vehicles (EVs) and batteries (battery cells contain more nickel; in the region of 20-50%)
– Rising utilization of electricity
– Increasing adoption of stainless-steel; whenever there is growth in car sales
– increasing activity in the construction sector and higher consumer spending on household appliances then it follows that nickel demand also increases
– High demand, especially in China accompanied by an increasing consumption level
– Renewable energy
Nickel’s potential threats (substitutes, etc.)
Currently there is no other metal that can substitute Nickel in each of the application fields. Additionally, there are only a few negative things about the metal:
– Can cause a variety of side effects on human health such as allergy
Even though nickel is an essential element for plants, as with all metals and chemicals, excessive amounts can adversely impact the quality of the environment for flora and fauna.
Nickel’s trade volume and price development
Nickel’s prices
Nickel’s trade volume and open interest
Trade volume
Open Interest
Nickel’s seasonality
Seasonality has been effectively suppressed. Historic seasonality is meanwhile a minor driver of nickel prices:
Nickel’s price factors
The growth of economies across the globe causes a significant increased demand for stainless steel, especially in Asia.
Stainless steel is a widely used material and since nickel is an important component in the production of stainless steel, we are seeing a similar increasing demand.
Globalization is also a factor greatly influencing the price for the commodity nickel. With the international dependence due to mining locations and production facilities of nickel, global events will have an impact on price discovery.
Governmental regulations and international tensions between countries can have a far-reaching effect on the supply and thus price of nickel.
The limited availability of mining locations also creates a highly dependent market with the few mining countries (see statistics above).
Substitutes can have a significant impact on the prices of nickel. During the 2007 crisis low grade nickel was used to produce so-called pig iron steel, which is of lower quality but much cheaper (this type of substitute is only profitable at a certain price).
When nickel hits such high prices, a certain stabilization can be achieved by using these “substitutes”.
However, especially for the areas EV and batteries, first class nickel or highest quality nickel is needed.
LME nickel futures contract
– Product symbol: NI
– Contract size: 6 metric tons
– Price quotation: U.S. Dollars and Cents per ton
– Contract months: monthly out to 27 months
– Tick size: $1.00 per ton
– For further contract specifications: https://www.lme.com/en/Metals/Non-ferrous/LME-Nickel/Contract-specifications
How to become a nickel trader?
The job of a nickel trader naturally has a lot of overlaps with other commodity traders. You have to be able to deal well in a fast-moving environment, make decisions quickly and carefully, build and maintain customer relationships and, of course, always be well informed about current market events. Market reports are part of your daily reading routine.
It is also essential to learn about all aspects of the physical transport of commodities and to be well versed in dry bulk shipping.
The best way to kickstart your career is by completing our flagship course: Shipping and Commodity Operation Certificate. Click here for more info.
Nickel’s key companies
Leading nickel companies worldwide in 2020 based on production volume (in 1,000 metric tons)
Distribution of nickel production worldwide in 2020, by company
Is nickel trader a sustainable career for the future?
Due to the facts mentioned above, nickel should stay interesting and even more important in the future due to the increasing spend in infrastructure projects as well as the increasing demand for EVs and battery technologies.
Therefore, nickel should be a sustainable career, especially interesting due to increasing prices which will lead to greater attention and as an even more lucrative commodity for large commodity (trading) companies.
Also it is worth mentioning the fact that nickel is not to be replaced by other sources as we see with fossil fuels like oil. In that case, the long-term goal is to greatly reduce this through renewable energies like hydrogen. For those reasons, nickel plays a primary role in such transition.
Outlook for nickel
According to the estimates by IMARC Group, the global nickel market is expected to grow at a CAGR of around 5% during 2021-2026.
Major trends to keep in mind:
- Development of high-density nickel-based batteries
- Green mining procedures, ESG in general
- Improving recycling technologies
- Increasing infrastructure investments