If I had a nickel for every time you said ...

Ah, the nickel market. It used to be a fringe grade that quietly moved along with some other nonferrous commodities. However, the nickel market now is more dramatic, with price movements dwarfing its larger nonferrous brethren, aluminum and copper.

But, just like the highly volatile copper and aluminum markets, nickel is susceptible to major price fluctuations, especially as prices reach far above expected levels.

Also, like a number of other nonferrous metals, nickel has received significant attention from investing groups. However, the basic fundamentals of the grade are fairly strong, with continued buying by European and Asian markets offsetting any sluggishness in the domestic market. The nickel market has been helped by the continued strength of the stainless steel market, which is expected to show continued growth this year.

The volatile nickel price is actually not as volatile when it is considered in percentage terms, rather than as a dollar figure, according to one Midwestern scrap processor.

While many nickel handlers say they feel markets should remain fairly healthy through this year, the first part of the year may have some rough patches. One larger nickel dealer notes that order books for the first quarter do not look that strong, which could keep a lid on nickel prices. However, as it is for many other grades, nickel demand for China in 2007 "should be terrific," another nickel scrap trader says.

Other nonferrous commodities appear to be in fairly decent balance, despite the general uncertainty over the direction of pricing. One key in preventing major problems is to not speculate on price, but to process and move material as soon as possible, according to some dealers.

Another nickel trader says that supplies are getting more and more difficult to come by. "One thing we are seeing is that (nickel) scrap is getting tighter and tighter. The availability of scrap nickel is coming down."

He echoes a number of other vendors who say that the U.S. domestic market for nickel is not as robust as they would hope, though offshore demand is more than picking up the slack.

At the same time, there is more finished product coming back into the United States, making it more challenging for domestic consumers to stay competitive.

And, with less nickel scrap available, most of the nickel being collected already has commitments, which is further reducing the supply of material for the open market.

And, similar to the copper market, the presence of various commodity funds has resulted in a more challenging market and has led to sharply higher prices for the material. "There is so little nickel on the LME (London Metal Exchange), which is causing all the volatility," a trader on the East Coast says.

In labor-management news, Xstrata Nickel has an nounced that members of CAW Local 598, representing production and maintenance workers at the company's Sudbury, Ontario, operations, have ratified a new three-year collective agreement, with 87 percent voting in favor of accepting the agreement.

(Additional news about nonferrous scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)

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