Nickel defies gravity.

Although much of the talk in the scrap industry has been on the high-wire act displayed by copper, the nickel market has far outstripped historical norms. And, according to presentations given by several speakers at ISRI 2007 Convention & Exhibition, the future could continue to push nickel to even greater heights.

Dr. Mo Ahmadzadeh, president of New York City-based Mitsui Bussan Commodities, touched on the fundamental realities driving the nickel market. A key, as it seems similarly in most every other base metal, has been China's positioning. Ahmadzadeh noted that China needed stainless, but shifted grades and was exporting more.

Looking at the statistics for the metal, last year's worldwide stainless steel production increased by 13.5 percent to 28.1 million metric tons. Further, throughout the next three years, stainless steel production is expected to climb at a 5 percent rate per year.

Responding to the surging demand for nickel, Ahmadzadeh noted that seven large projects have a chance to be developed in the next four years, bringing around 250,000 additional metric tons on the market.

Meanwhile, the surge in nickel prices has resulted in some consumers looking to blend more pig iron and/or scrap in the mix. However, Ahmadzadeh said that scrap supplies were presently capped.

As a result of surging demand and insufficient new capacity, supply deficits are expected to continue.

An even more bullish outlook came from Jason Schenker with Wachovia. While acknowledging that the growth for nickel will be lower this year than last year, business should still be good. This, despite his opinion that the U.S. economy hit a "soft patch" during the first quarter of the year. However, he expects to see the economy "picking up in the back half." Further, Schenker said he felt that the global nickel growth would be above trend, with growth likely to continue.

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A key driver for continued improvements in the nickel market is greater focus on energy efficiencies and the resultant trend toward sustainable environmental practices.

The growth in the use of hybrid vehicles is one area that is helping boost nickel demand. The number of these vehicles produced is expected to continue increasing.

One potential downside to the soaring price for nickel is the talk about some consumers looking to substitute other materials, perhaps lower grades of stainless. While there have been some moves to incorporate more 200-series stainless steel in some applications, analysts said there would still be a need for many consumers to continue using the higher-value 300 series of stainless steel for its high corrosion resistance and malleability.

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