China using more nickel

Nickel has shown remarkable resilience during the previous three years of world economic slowdown and recession, buoyed mostly by increased stainless steel production in China, according to the Economics of Nickel (10th edition).

The report, published by London-based by Roskill Information Services, predicts that nickel prices will remain in the range of US$5,000-8,800 per tonne, reflecting modifications at Noril’sk Nickel in Russia and new capacity slated to come on-stream by 2006.

The report further predicts cost-cutting by the large sulphide producers in Canada and Australia.

Growth in demand for stainless steel, nickel’s largest market, is expected to remain strong in the years leading up to 2006, especially in China and India. Chinese production of stainless steel is expected to rise sharply to about 2.5 million tonnes per year over the next 5-7 years, with at least four projects scheduled to be commissioned by 2006. As a result, the country will become the world’s second-largest stainless steel producer, just behind Japan. World demand for stainless steel should grow by 4.8% until 2006.

Primary nickel consumption declined by 2.7% in 2001 but is forecast to grow at an average annual rate of slightly more than 4% during the next four years. This growth will be achieved with help from the growing demand for nickel-based batteries. The report predicts that demand for both primary and secondary nickel in batteries will increase by as much as 5% per year until 2006, driven mostly by nickel-based batteries used in cell phones, lap-top computers and hybrid electric vehicles (HEV). In fact, Nickel Metal Hydride (NiMH) batteries are regarded as the primary choice for HEV manufacturers in Japan and the U.S.

Chinese nickel consumption increased sharply in 2000 and 2001, reaching 83,200 tonnes. This increase resulted in that country’s becoming the fifth-largest nickel consumer, with a 7.6% share of the world market. Consumption in virtually all the other major markets increased significantly in the mid- and late 1990s, particularly in South Africa, where it peaked when stainless steel production was introduced.

World mine production of nickel totalled 1.3 million tonnes in 2001, the highest output ever recorded. The main producing countries were Russia, with 22%, Canada and Australia, with 15% each, and New Caledonia, with 10%. Last year also witnessed a record output of 1.1 million tonnes of refined nickel in all its forms. Russian output remained the world’s largest, with 21%, having increased significantly since the mid-1990s to 236,000 tonnes. Japanese output was the second largest, with 13% of the total.

It was hoped that Australia’s dry laterite mines employing pressure-acid-leach technology would produce nickel at costs significantly below the industry average, and ultimately lower average production costs worldwide. However, they have operated well below expectations in the first few years of operation and have yet to achieve their design criteria. Nevertheless, nickel production costs continue to come down, mainly as a result of measures taken by the world’s major producers, most of whom are exploiting sulphide deposits.

The 328-page report contains 154 tables and reviews the nickel industry in 45 countries. Economics of Nickel retails for US$2,800.

— The preceding is from an information bulletin published by Roskill Information Services.