In the last year, the recent economic crisis has led to wildly fluctuating prices, with LME prices peaking at just over $52,000/t in May 2007 and falling by over 80% by the end of 2008 as demand collapsed and output decreased. By the fourth quarter of 2009, however, prices had recovered to $18,500/t.
The report suggests that nickel consumption will increase by around 7% in 2010 with an annual average price in 2010 forecast to around US$20,000/t, expected to rise in both 2011 and 2012. The average price between 2010 and 2012 is forecast at more than US$22,000/t. As demand for nickel increases across the globe, production is likely to follow suit. A market surplus of around 75,000t is forecast for 2010, as output of primary nickel increases to 1.4Mt.
This recovery is primarily due to an increase in demand for stainless steel, production of which accounts for around two-thirds of total nickel consumption. Crude stainless steel production began falling by the third quarter of 2007, while the first three quarters of 2009 saw production decline globally by around 15% year-on-year, with the fall most prominent in developed economies; emerging markets such as China and India actually saw domestic output rise. While global crude stainless steel production in 2009 is forecast to decline to around 25Mt, 2010 is expected to see an increase in demand and production, the latter forecast to rise by around 8% in 2010 to 27Mt and almost 30Mt in 2011.