May 2013 Nickel Pricing and its Impact on Inconel, Monel and Other Cobalt Aerospace Alloys

Most people don't know that the nickel market depends heavily on stainless steel production and stainless steel pricing also depends on the worldwide price of nickel. No matter how you slice it 66% of all nickel mined and produced will end up in stainless steel. So why is the price of Nickel so important to surcharges and the overall price of Inconel, Monel and other Cobalt Aerospace Alloys.

Only within the last hundred or so years have nickel & cobalt become a mainstay in steel production. Specifically for the creation of super alloys or specialty aerospace alloys used in missiles, jet engines, electrical components and numerous other defense and military applications.

Stainless steel is comprised of mostly chromium but nickel content in 304 (one of the most common grades of stainless steels) only makes up 8% of the chemical composition. However, nickel's impact on pricing is more prevalent. Up to 60% of the cost of stainless steel is due in part to the volatile nickel commodity trading price.

The US had a strategic stockpile of nickel due to the necessary needs during wartime and the usual lack of supply. As of 1999 though, the US had sold off the last of its stockpile. The United States is now 100% dependent on foreign imports and potential scrap sources for these necessary components of stainless steel.

Nickel pricing is currently around the same as it was last year at this point. With that in mind there is still pent up demand for stainless steel that is only starting to trickle back into the market in the form of purchases. Over the past 2 years, production of worldwide stainless steel is up which means that more nickel has been needed. If the trend continues and more nickel is needed, then we can expect the demand to continue and the price to rise. Therefore, we could potentially expect the price of stainless steel to rise since it's price is heavily weighted by the price of nickel.

There are many things that go into the price of stainless steel but hopefully the price will trend along the same lines as demand. More demand, equals less supply and thus a higher price in tow. That means that we as a country are consuming more steel and making more things. We could be upgrading our infrastructure, building out roadways, making more buildings, doing more with oil and gas...there are so many options that as long as the United States can continue to (start) consuming more stainless steel the entire economy as a whole stands to benefit. What are your thoughts as to how the price of Nickel impacts our overall economy? Please feel free to comment below and join the conversation.

Michlin Metals is a Woman Owned Small Business Aerospace Metal and Stainless Steel Distributor. Follow Michlin on Twitter @MichlinMetals, Facebook, LinkedIn, Google+ or on the Web at www.michlinmetals.com. More on the author on Google+.