Facts ‘n’ Figures — Low stainless demand hits nickel

World consumption of nickel in 1998 is estimated to have fallen to 1 million tonnes from a total of 1.01 million tonnes in the previous year. The decline was the result of decreased demand in stainless steel (nickel’s main market), according to a report from Nova Scotia-based Metals Economics Group.

In Asia, consumption dropped 11.5%, whereas demand in Japan, stainless’s largest market, was off by 17.5% to 163,700 tonnes in 1998 from 198,400 tonnes in 1997. In Taiwan and South Korea, demand fell by 5%.

Germany was Europe’s largest consumer, with demand having risen 9.7% to 97,600 tonnes in 1998 from 89,000 tonnes in 1997. All other European countries showed modest gains of between 1,000 and 3,000 tonnes. In the U.S., consumption rose by 1%, whereas consumption in all of North and South America rose 1.7%.

Demand for primary nickel in 1999 is expected to be less than what it was in 1997, despite industrial growth in the U.S. and a business revival in South Korea and China. Also, economic turmoil in Asia, the Commonwealth of Independent States and Latin America will help suppress demand.

Although the production of stainless steel flattened in 1998, output is expected to rebound to normal growth levels of about 5% per year. Last year, the stainless steel industry was responsible for two-thirds of total nickel consumption; by 2005, this is expected to rise to 71%. According to current trends in demand, stainless production should undergo a 38% increase by 2005. Based on these trends, demand for primary nickel in stainless should increase by about 40%, to 860,000 tonnes in 2005 from 600,000 tonnes in 1998.

Poor nickel prices helped create a small surplus by the end of last year.

Prices fell by about 46%, compared with 1997, when Asia’s financial woes were just becoming visible. Lesser demand for stainless steel in this part of the world was reflected in increased stockpiles, which accumulated during the boom two years ago but which are now overhanging the market.

Because of lower demand, the International Nickel Study Group estimates that 25,000 tonnes of surplus nickel will be registered for 1998. However, stocks at the London Metal Exchange at the end of January 1999 stood at 65,500 tonnes, compared with 66,000 tonnes at the end of December. The difference is a decline of 0.8%. Compared with January of 1997, stocks have fallen by 0.5%. Although indications are that nickel consumption should rise in 1999, a surplus in world markets is nonetheless predicted.