Market Basics » Nickel

Description

Nickel is a chemical element, with the chemical symbol Ni and atomic number 28. Nickel makes up 0.008% of the Earth's crust. However, when the deeper core of the Earth is included, nickel becomes more abundant, and is the fifth most common element after iron, oxygen, silicon and magnesium.

It is a silvery-white lustrous metal with a slight golden tinge. It is one of the four elements that are ferromagnetic around room temperature, the other three being iron, cobalt and gadolinium.

The use of nickel has been traced as far back as 3500 BC, but it was first isolated and classified as a chemical element in 1751 by Axel Fredrik Cronstedt, who initially mistook its ore for a copper mineral.

The metal is corrosion-resistant, finding many uses in alloys, as a plating, in the manufacture of coins, magnets and common household utensils, as a catalyst for hydrogenation, and in a variety of other applications. It maintains its mechanical and physical characteristics even when subjected to extreme temperatures.

Enzymes of certain life-forms contain nickel as an active center, which makes the metal an essential nutrient for those life forms.

Trading unit

Contracts are usually priced as U.S. dollars per metric tonne. Spot prices are in U.S. dollars per pound.

Units for delivery

Full plate cathode, cut cathode, pellets or briquettes of 99.80% minimum purity, according to London Metal Exchange specifications.

Pricing mechanisms

The global trade in nickel consists of over-the-counter, or OTC, transactions in spot, forwards, and options and other derivatives.

Most of the trading volume clears through London.

Avenues of trade

The global trade in nickel consists of over-the-counter, or OTC, transactions in spot, forwards, and options and other derivatives, together with exchange-traded futures and options.

Nickel futures are the most regular way of gauging copper prices. Futures are traded most notably on the London Metals Exchange (LME) Nickel futures also are traded on the Osaka Mercantile Exchange in Japan.

Nickel also can be traded via exchange traded fund, or ETF, which allows investors to put money into the metal without owning any of it directly in a physical form.

Although less available in pure form than other metals, nickel can be bought and sold using an immediate spot price.

Supply

Nickel production has long been in the hands of only a few large producers, with the largest producer base in Russia. But even though nickel is concentrated in the hands of a few producers, its geographical production base is very evenly spread, with 29% produced in the former eastern bloc, 21% produced in the Americas, 16% in Europe, 15% in Australia, 14% in Asia and 5% in Africa.

Brazilian producer VALE is the world's largest nickel producer. GMK Norilsk Nickel of Russia is the second-largest, BHP Billiton is the thing-largest, and London's Xstrata Nickel rounds out the top four.

Demand

Nickel is the main metal used to produce stainless steal. According to the United States Geological Service, about 65% of nickel consumed in the Western World is used to make austenitic stainless steel. Another 12% goes into superalloys, which ace used widely throughout the aerospace industry. The nickel institute estimates that two-thirds of all nickel produced globally goes into stainless steel.

Nickel also is used in electronics, such as cell phones, computers and digital cameras, as well as alloy steels, rechargeable batteries, catalysts, coinage and chemicals.

European and Asia Pacific nations are the biggest consumers of nickel in the world.

Nickel is rarely used in its purest form. Most nickel is combined with other metals to form alloys. As a transition metal, it combines readily with other metals, especially iron, chromium and copper, to produce alloys with particular combinations of properties that cannot be achieved by pure metals:

  • Alloys of iron, nickel and chromium can be formulated to combine strength and ductility with resistance to corrosion in various environments. The most widely known of these alloys is stainless steel, which is used in transportation, construction and in industrial applications in the chemical industry and in oil and gas engineering, where the environment can be very corrosive.
  • Other alloys of nickel, chromium and other metals have been developed for very-high-temperature strength and corrosion resistance. These alloys are used in jet engines and in industrial gas turbines for electricity generation. They are also used in heater elements, resistance wires, heat exchangers in power plants, furnace components and industrial pumps and valves.

Other nickel-containing alloys are used for specialist applications requiring special properties like magnetic attraction and controlled expansion. Alloys of nickel are used in electronic applications, in the automotive industry and in other special applications.

Electroplating is another common application process for nickel. Nickel electroplating is the electrochemical deposition of nickel onto a substrate material to enhance its properties or surface finish. This process is used for decorative purposes in everyday applications from providing the bright metallic finish to our bathroom taps and shower heads to decorating the wheels on luxury vehicles. The versatility of the process also enable the manufacturing of functional products such as components for computers and electronic items and molds that are used to "stamp" CD disks.

Extraction, Processing, Refining & Supply Chain

Primary nickel is produced from two very different ores, lateritic and sulfidic.

Lateritic ores are normally found in tropical climates where weathering, with time, extracts and deposits the ore in layers at varying depths below the surface. Lateritic ores are excavated using large earth-moving equipment and are screened to remove boulders. Sulfidic ores, often found in conjunction with copper-bearing ores, are mined from underground. Following is a description of the processing steps used for the two types of ores.

Lateritic Ore Processing

Lateritic ores have a high percentage of free and combined moisture, which must be removed. Drying removes free moisture; chemically bound water is removed by a reduction furnace, which also reduces the nickel oxide. Lateritic ores have no significant fuel value, and an electric furnace is needed to obtain the high temperatures required to accommodate the high magnesia content of the ore. Some laterite smelters add sulfur to the furnace to produce a matte for processing. Most laterite nickel processers run the furnaces so as to reduce the iron content sufficiently to produce ferronickel products. Hydrometallurgical processes based on ammonia or sulfuric acid leach are also used. Ammonia leach is usually applied to the ore after the reduction roast step.

Sulfidic Ore Processing

Flash smelting is the most common process in modern technology, but electric smelting is used for more complex raw materials when increased flexibility is needed. Both processes use dried concentrates. Electric smelting requires a roasting step before smelting to reduce sulfur content and volatiles. Older nickel-smelting processes, such as blast or reverberatory furnaces, are no longer acceptable because of low energy efficiencies and environmental concerns. In flash smelting, dry sulfide ore containing less than 1% moisture is fed to the furnace along with preheated air, oxygen-enriched air (30-40% oxygen), or pure oxygen. Iron and sulfur are oxidized. The heat that results from exothermic reactions is adequate to smelt concentrate, producing a liquid matte (up to 45% nickel) and a fluid slag. Furnace matte still contains iron and sulfur, and these are oxidized in the converting step to sulfur dioxide and iron oxide by injecting air or oxygen into the molten bath. Oxides form a slag, which is skimmed off. Slags are processed in an electric furnace prior to discard to recover nickel. Process gases are cooled, and particulates are then removed by gas-cleaning devices.

Nickel Refining

Various processes are used to refine nickel matte. Fluid bed roasting and chlorine-hydrogen reduction produce high-grade nickel oxides (more than 95% nickel). Vapor processes such as the carbonyl process can be used to produce high-purity nickel pellets. In this process, copper and precious metals remain as a pyrophoric residue that requires separate treatment. Use of electrical cells equipped with inert cathodes is the most common technology for nickel refining. Electrowinning, in which nickel is removed from solution in cells equipped with inert anodes, is the more common refining process. Sulfuric acid solutions or, less commonly, chloride electrolytes are used.

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