Long-Term Outlook for Nickel is Positive, Despite Record Lows

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Last week, nickel hit its lowest value in more than a decade, joining a number of commodities seeing record lows amidst a slowdown in China.

But analysts from Technavio indicate that despite the current droop, demand for nickel is still expected to reach 2.41 million metric tons by 2019, growing at a slow but steady CAGR of 5.32% from 2014-2019.

Technavio’s report on the global nickel market indicates that high demand from the transportation sector will buoy nickel and help the market weather decreased demand from China, one of the major end-users of the metal.

Nickel use in transport and defense will hit 0.82 million metric tons by 2019

Transportation and defense is the largest end-user segment in the global nickel market, and development of modern transport infrastructure is expected to escalate demand for nickel through the forecast period.

Technavio expects demand for nickel to increase in tandem with growing automobile shipments worldwide.

Automobile shipments 2013-2019 (million units)

Source: Technavio, 2015

But despite the generally positive outlook for the nickel market, there are still a few factors expected to slow growth over the next four years. Chief among these is the discovery of new substitutes that can replace nickel in a variety of applications.

Elements such as chromium are being used to manufacture stainless steels called ultrahigh chromium stainless steels, and other steels like low nickel or duplex steels are also gaining wider acceptance globally.

Additionally, titanium alloys are being used in place of nickel to limit corrosion in piping, and the battery industry is turning to lithium ion instead of nickel metal hydride. These substitutes will decrease the sales of nickel and limit market growth.

Market share of nickel in various end-usage segments in 2019

Other end-uses include alnico magnets, vaults, coinage, and ceramics

Source: Technavio, 2015

However, while these new substitutes may disrupt growth of the nickel market, they won’t be enough to unseat the metal in the face of high demand for fabricated metal products.

According to Technavio, the market for nickel in the fabricated metal products segment is expected to grow from 0.37 million metric tons in 2014 to 0.48 million metric tons in 2019, at a CAGR of 5.34%. This will support growth in the wider nickel through the forecast period.

For more information, view Technavio’s new report on the global nickel market.