A beginner’s guide to nickel: Price, uses & market overview

Explore a thorough overview of the Nickel market, learn how it works in simple terms and get to grips with its significance as a popular global commodity.
By:
Updated: Dec 4, 2023
Listen

On this page, we explore everything you need to know about nickel. Gain insights into Nickel market trends, pricing mechanisms, and the environmental impact of nickel. 

Read on to learn more about this popular commodity and find links to beginner friendly guides explaining how you can get involved in nickel. 

What is nickel?

Copy link to section

Nickel is a base metal that has been around for over 2000 years and is used in a broad range of products and industries. Although, it is mainly used in the production of stainless steel. While not as popular as precious metals such as gold and silver, nickel makes a good commodity to trade due to its demand from the infrastructure industry. 

Global nickel usage has exploded in recent decades – reaching over 2.5 million metric tons in 2021 – making it a critical material supporting infrastructure growth and the green energy revolution. Nickel mining and production started in the late 19th century when Canada was the top global producer. Today, Russia and Indonesia are the worlds largest producers. 

The metal’s importance is rising as a key component of lithium-ion batteries that enable electric vehicles, renewable energy storage, and consumer electronics. With growing global adoption of these technologies, demand for specialised nickel products is expected to continue surging.

Nickel market overview

Copy link to section

The nickel futures market has only been operating since the 1950s when the London Metals Exchange began offering contracts on the metal. Now, with annual production of nearly 3 million metric tons, nickel trades actively on exchanges worldwide. 

Like most markets, supply and demand affect the price of nickel. Demand mostly comes from the infrastructure industry, the Chinese market, and increasingly from batteries. Nickel is essential when producing stainless steel which is used commonly in construction. China is the largest consumer of nickel in the world and batteries for EVs all require nickel. 

Nickel is a global market and is mined in a few regions. Indonesia, the Philippines, and Russia are the three largest suppliers of nickel worldwide. Political instability in these countries can impact its price. For example, when Russia invaded Ukraine in 2022, the price of nickel reached record levels when fears grew over supply issues in Europe.

Is nickel valuable? 

Copy link to section

Yes, nickel is a valuable commodity and there are numerous reasons why investors are attracted to the market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.

  • Growing demand. Nikel has a variety of uses and is a key component in the production of stainless steel. Stainless steel is used in many applications, including construction, transportation, and manufacturing. The demand for steel, and consequently nickel, will increase as the global economy grows. 
  • Limited supply. Nickel is abundant in the Earth’s crust. However, the process of mining and refining nickel is complex and costly. This has resulted in only a few nickel mines worldwide, meaning a few companies control its supply. 
  • It is used in batteries. Nickel is an essential component in producing batteries used for electric vehicles. As demand for electric vehicles grows, so will the demand for nickel. 
  • Diversify your portfolio. Nickel is a top way to diversify your portfolio and include a commodity that’s not only in demand but expected to appreciate in price over time. It can also be used as a hedge against inflation – Inflation is when money loses its value over time. Precious commodities tend to rise when inflation rates rise, making them a good hedge against it. 

How to invest in nickel

Copy link to section

You can invest in nickel by using a commodity trading platform. These platforms offer a range of commodities and are very easy to use. There are different platforms suitable for specific requirements. 

Some let you buy nickel, others let you trade nickel, and many are designed for investing in the grain. Visit our dedicated guide to discover how to invest in Nickel.

Nickel in your investment portfolio

Copy link to section

A diverse investment portfolio can help protect you during market uncertainty, and the inclusion of nickel can add value while allowing you to spread your money across various markets. 

Nickel often moves independently to traditional investments like stocks and bonds. You can include nickel in your portfolio as a hedge against potential losses. During times of economic uncertainty, investors view commodity grains such as nickel as attractive options. 

Nickel’s history and the fact it is a required element in many new technologies and electric vehicles, makes it a good long term play.

Nickel vs other commodities

Copy link to section

Nickel is part of the metals family of commodities, including gold, platinum, and palladium. Each commodity is unique in its own way and offers different features for investors and traders. You can learn more about specific metals using our dedicated guides below. 

  • Gold. Gold is the best known metal, used as a store of value, and an inflation hedge. 
  • Platinum. Platinum is more expensive than gold and used in many industries
  • Silver. Silver is a less expensive precious metal that is a popular component in electronics. 

FAQs

Copy link to section
What is the projected growth rate for global nickel demand?
Which countries are the top producers of nickel currently?
What share of nickel is used to manufacture stainless steel?
How has the nickel market been impacted by the electric vehicle industry?
Which countries are the largest importers of nickel?


Sources & references
Risk disclaimer
Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.