Nickel outlook - 2000 to 2010

Nickel demand has grown at an historic average annual rate of approximately 4% and is expected to remain at that rate. This strength has been driven primarily by a growing demand for nickel in stainless steel, whose production accounts for approximately two-thirds of primary nickel demand. Stainless steel is expected to remain a growth product, especially in the developing nations that will require a significant volume of stainless steel for infrastructure development. Nickel uses, in a range of applications outside stainless steel, will also be favourable, especially in specialty product applications for electronics and, increasingly, hybrid automobiles. The world economy is in a period of recovery. With the new laterite projects having ramp-up problems, limited prospects of new capacity in the next two to three years, and Russian production stable, the possibility of the market remaining tight over the next three years is high. This will have consequences for the short-term nickel price. In the longer term, the price of nickel will have to remain in the range of US$2.75/lb to US$3.50/lb to satisfy the supply-demand situation and thus justify development of new operations. Inco still believes that a US$3/lb (US$6,600/t) long-term price is appropriate for the financial evaluation of projects.