Nickel is much more than a portion of the composition of a 5-cent coin in the United States. It is used in the composition of Stainless Steel, which plays a very important role in the appliance, automotive and marine industries. Stainless steel is always in high demand because of its inherent ability to resist corrosion. However, what might be more fascinating is the volatility of the price at which Nickel is bought.
The 28th element on the periodic table has seen its price go as high as $50,000 to as low as $10,000 in the timeframe of one year. In 2007, the demand for nickel became so great that a new form of the shiny metal had to be created in order to stop miners from depleting the world’s supply. But that was a decade ago, what about now? Why is the price still so volatile? The answer to these questions is as simple and complex as fundamental supply and demand.
International Nickel Markets
China is the world’s stainless steel powerhouse, but that does not mean they completely control the price of nickel. In fact, the 2013 Indonesian export ban caused a massive increase in stainless steel price. As 60% of China’s nickel supply was shut off, the demand for the raw material went up greatly which caused a dramatic spike in price. Global politics plays a large role in the (seemingly) ever-rising price of nickel, but of course the world’s natural supply of the ore proposes another issue.
Due to the increase in stainless steel usage in recent years, mining of nickel ore has increased substantially through the past years. Well over 1.5 million tons of nickel is mined every year. Different approaches to conserving the raw material have been taken, but that has not stopped the extensive mining of the raw material. So, as supply of the natural resource decreases and demand naturally increases, then so does the price.
Competition in the Nickel Market
The important question is as follows: how will you stay competitive? At CFI, more than 15% of parts supplied are made of stainless steel or are nickel plated. Of course, this poses as a large obstacle in the normal function of business. What sets CFI apart from our competition (other than our service-first approach) is the focus on strong relationships with our supply base.
Our partners overseas forecast CFI to purchase a certain weight of stainless steel parts per year. Because of that expectation, they wait for an especially low stainless steel price, then they buy in bulk. This allows our prices to stay competitive. Even if there is an increase in nickel price, CFI and CFI’s partners overseas will absorb the price increase so that the burden is but a fraction of what our competition would reflect on you—the customer.
At the heart of Components for Industry is an idea, a value: our customers are our family, and family always comes first. For more information about our stainless steel components or to fulfill any custom component need, call (847) 630-0333 or visit our website at componentsforindustry.com.