Nickel

Nickel is an industrial metal that plays a key role in the production of stainless steel and electric vehicle batteries. Nickel is widely traded on global commodity exchanges, however online investing requires a solid understanding of market trends, supply and demand dynamics, and geopolitical risks. This article lists the main factors that influence nickel prices and ways to trade the industrial metal. Our traders have also ranked the top nickel brokers.

What Is Nickel Trading?

Nickel trading refers to the buying and selling of the metal, typically through online brokers.

Nickel is a silvery-white metal that is widely used in the production of stainless steel, batteries, and alloys. Nickel trading can be done through spot trades, futures and options, contracts for difference (CFDs), exchange-traded funds (ETFs), and more.

Physical trading involves the actual delivery of nickel, while derivatives like CFDs allow traders to simply speculate on rising or falling prices. Investing in companies involved in the production of nickel and exchange-traded funds (ETFs) also allows retail investors to gain exposure to nickel prices without owning the metal.

Nickel prices can be affected by a range of factors, including global supply and demand, geopolitical events, currency fluctuations, and technological advancements that have led to increased orders for electric vehicle batteries. As a result, nickel trading can be highly volatile, presenting both opportunities and risks to online investors.

History

Nickel has been used for thousands of years, and in the mid-19th century began to be used widely in industrial applications. The first large-scale production of nickel began in the 1860s in Canada, which became the world’s leading producer.

As nickel became more important in industrial applications, its price began to fluctuate based on supply and demand. The first organised nickel exchange was established in New York in 1879, which allowed traders to buy and sell nickel contracts on a standardised exchange.

Other exchanges then offered nickel trading, including the London Metal Exchange (LME), which began trading nickel futures in 1978. Today, the LME is one of the world’s leading exchanges for nickel trading, along with other commodities like copper, aluminium, and zinc. Nickel trading has also become more accessible to individual investors through online brokers and platforms, allowing users to trade nickel from home.

The price of nickel has seen significant volatility in recent years. In Q1 of 2022, the metal increased in value by over 250% in just two days, leading to the LME intervening and suspending trades. The industrial metal hit the $100,000 per tonne threshold.

Price Chart

Impacts On Nickel Prices

Supply & Demand

The majority of nickel comes from mining, however, recycling also contributes upwards of 40% of global consumption.

The largest nickel mining and producing countries include The Philippines, Indonesia, Russia, Canada, and Australia. Logistical issues or events that impact nickel reserves in these countries can affect the price of the metal. Rising production in Indonesia, in particular, could have a notable impact on nickel prices in the future.

More than half of nickel demand comes from China. This is a significant uptick, with the country responsible for less than 20% of global demand just a decade ago. Yet as China’s economic growth has subsided in recent years, analysts are less optimistic about the future price of the industrial metal.

Changes in supply and demand can also lead to the stockpiling or hoarding of nickel, which can artificially drive up prices. Similarly, speculation in the futures markets can influence the price of nickel, especially in the short term.

Other key influences on the price of nickel at brokers include:

• Geopolitical Events – Political instability, trade tensions, and other geopolitical events can affect nickel prices. For example, changes in trade policies, tariffs, or sanctions can disrupt the supply and demand dynamics of nickel and impact its price.
• Currency Fluctuations – Since nickel is priced in US dollars, fluctuations in the value of currencies against the US dollar can impact its price. When the value of the US dollar strengthens, nickel’s price can decrease, as it becomes more expensive for buyers in other countries, such as the UK.
• Technological Advancements – Advances in technology, particularly in the electric vehicle industry, have led to increased demand for nickel, which is used in producing electric vehicle batteries. Any changes in the technology or demand for electric vehicles can therefore affect nickel prices.
• Environmental Regulations – Environmental regulations can impact the production and consumption of nickel. For example, stricter environmental regulations on mining or production processes can reduce supply, leading to higher prices.

How To Trade Nickel

The top nickel brokers offer multiple trading vehicles:

• Futures: Futures contracts allow traders to buy or sell nickel at a future date and price. Futures contracts for nickel are available on major exchanges, like the London Metal Exchange (LME) and the Chicago Mercantile Exchange (CME).
• Options: Options contracts give traders the right, but not the obligation, to buy or sell nickel at a specific price and time in the future. Options contracts for nickel are also available on major exchanges via online brokers and trading platforms.
• Contracts for difference (CFDs): CFDs allow traders to speculate on the price of nickel without owning the underlying asset. This is done through a contract with a broker, allowing the trader to profit from the difference between the buy and sell price. Leverage also allows traders to open much larger positions than their capital would otherwise allow.
• Stocks: Popular nickel stocks include Vale S.A., Glencore, and BHG Group. These are all large global mining firms with extensive nickel production operations. Glencore is also traded on the London Stock Exchange, making it easily accessible to UK investors.
• Exchange-traded funds (ETFs): ETFs are investment funds that track the price of a basket of assets that can include nickel, alongside other metals for instance. Popular nickel ETFs include Global X Nickel Miners ETF and SPDR S&P Metals and Mining ETF.
• Spread betting: Spread betting is a form of betting on the price of nickel without owning the underlying metal. It is similar to CFDs, best suited to short-term trading and profits are usually tax-free in the UK.

Comparing Nickel Brokers

• Market access: Check if brokers provides access to major nickel exchanges, such as the London Metal Exchange (LME), which is a key exchange for online nickel trading.
• Trading platforms: Consider the trading platforms offered by brokers, including their user-friendliness, functionality, strategy support, and features for analysing and tracking futures nickel prices. The most popular and widely used are MT4, MT5 and cTrader, so aim to find brokers that offers one or more of these, such as Pepperstone, which offers all three.
• Trading tools: Look for nickel brokers that offer tools and resources specifically designed for nickel trading, such as real-time price charts, technical analysis tools, and news and expert analysis on the metal market and associated limits.
• Trading vehicles: Check if nickel brokers offer a range of trading vehicles, including spot, futures, options, CFDs and shares in leading nickel mining and production companies.
• Regulation and security: Ensure that nickel brokers are regulated and adheres to strict security protocols to protect client funds and personal information. For UK traders, the best nickel brokers should be regulated by the FCA, such as XTB and CMC Markets.

Pros Of Trading Nickel

• Demand: Nickel is a key component in the production of stainless steel and other industrial applications, and its demand is expected to increase with the growth of emerging economies and the expansion of the electric vehicle market.
• Liquid market: The nickel market is liquid, with high trading volumes and tight bid-ask spreads, making it easier for traders to enter and exit positions with low fees.
• Diversification: Trading nickel can offer investors a way to diversify their portfolios, as it is a non-correlated asset that can move independently of other investments.
• Access to global markets: Nickel is traded on major exchanges worldwide, providing UK investors with access to a global market and the ability to trade at any time of the day.

Cons Of Trading Nickel

• Price volatility: Nickel prices can be highly volatile, which can lead to significant losses for traders who are not adequately prepared or who take on too much risk.
• Market risks: Trading nickel involves the risks associated with commodity markets, such as supply and demand imbalances, geopolitical risks, and changes in global economic conditions.
• High leverage: Trading nickel often involves the use of leverage, which can amplify potential gains but also increase potential losses.
• Storage and transportation costs: For physical traders, storing and transporting nickel can be costly and eat into potential profits.
• Environmental concerns: The mining and production of nickel can have environmental impacts, which may lead to increased regulations and costs in the future, driving down prices.
• Currency risks: Trading nickel involves currency risks, as it is often denominated in US dollars, and changes in exchange rates can impact the profitability of trades.

Nickel Trading Hours

Nickel trading hours can vary depending on the exchange where it is traded. The London Metal Exchange (LME), the largest exchange for nickel trading, operates from Monday to Friday, with the following trading hours:

• Pre-market opening: 01:00 to 07:00 (GMT)
• Kerb trading: 07:00 to 08:00 (GMT)
• Open-outcry trading: 08:00 to 16:35 (GMT)
• Ring trading: 16:35 to 17:00 (GMT)
• Kerb trading: 17:00 to 18:00 (GMT)

Trading hours for the LME may be subject to change, particularly during public holidays or other market disruptions.

Other exchanges where nickel is traded, such as the Shanghai Futures Exchange (SHFE) or the Multi Commodity Exchange of India (MCX), may have different trading hours, depending on their location and operating hours. Nickel brokers may also set their own times based on respective exchanges.

Bottom Line On Nickel Trading

Nickel is a widely traded commodity that plays an important role in the production of stainless steel and other industrial applications, including electric vehicle batteries. The top nickel brokers offer low fees, a reliable platform and app, plus hold a license with the Financial Conduct Authority.

Use our table of leading nickel brokers to start trading.

FAQ

Article Sources

Nickel mining data

Nickel properties and uses

London Metal Exchange nickel trading updates