Base Metals


Nickel's primary use (65%) is in the manufacturing of stainless steels, with a further 20% of nickel consumption being used to produce other steel and non-ferous alloys, including super alloys. 9% of nickel is used in electro-plating with about 6% being used in coins and nickel chemicals. Demand for stainless steel took off in the mid-1980's, especially in the chemical engineering, paper and food processing industries, where stainless steels high melting point, high resistance to corrosion and oxidation, and strength, made it invaluable as it could withstand the heat, chemicals, acids and pressures that these industrial processes require. Stainless steel is also used in construction and household items such as kitchen sinks, pots, pans and utensils and work surfaces. Nickel is also used to produce super-alloys which are used extensively in the aerospace industries.

Demand : Nickel, or more to the point stainless steel, is a relatively new metal and its use has grown significantly as Asia and China have built up their infrastructure. Much of the West's infrastructure was built before stainless steel was a popular building material. Growth in nickel demand is expected to come primarily from further growth in stainless steel. However the nickel market needs to be careful that it does not out price itself. In 2004, high nickel prices started to see some stainless steel producers switch from producing high nickel based stainless steels (austenitic stainless steels, or 300 series) to low nickel based stainless steels, (200 series).

Supply: Nickel occurs as oxides, sulphides and silicates, with nickel ores mined in about 20 countries and smelted or refined in about 25 countries. Primary nickel is produced and used in the form of ferro-nickel, nickel oxides and other chemicals, and as more or less pure nickel metal. Nickel is also readily recycled in many of its applications, and large tonnages of secondary or "scrap" nickel are used to supplement newly mined metal.
Nickel production has for a long time been in the hands of only a few large producers, with the largest producer base in Russia. The combination of a small producer base and the lack of transparacy of having the largest producer based in Russia, has meant that nickel supply has at times been volatile. A strike at a producer can quickly tighten supply. Likewise unclear and secretive production and shipping schedules
combined with ever changing export and tax legislation in Russia, can have a big impact on market sentiment.


Aluminium is widely used in the construction, transport, and packaging industries. Aluminium's attributes are ideal for the construction business. The metal is strong, light, corrosion resistent and versatile. It is used in construction, for windows, doors, cladding, weather-proofing, light constructions such as conservatories and canopies.

In transport, aluminium is used in the auto, aerospace, rail and marine industries, again its strength, lightness and resistence to corrosion means it is ideally suited for both the construction of the shell / bodies as well as many of the working parts, fixtures, fittings and engine components. In aircraft, aluminium and aluminium alloys account for around 80% of an aircrafts unladen weight. In auto production, aluminium is gaining market share from steel for vehicles bodies, engine blocks, engine components and wheels. Its use for railway carridges and for ships hulls, fixtures and fittings, all mean considerable weight savings compared to their steel counterparts.

Demand : With some many applications it is of little surprise that aluminium has rapidly become the largest base metal in terms of tonnage consumed annually. With all aspects of its use likely to benefit from continuing growth in the developed economies aluminium has a stable outlook, however, with the rapid industrialisation and urbanisation of countries like China and India, aluminium demand is set to accelerate sharply. Primary aluminium demand has risen from 2 million tonnes in 1950, to 9.5 million tonnes in 1970, to 15 million tonnes in 1990 and is expected to rise to 23 million tonnes in 2005.

Supply : Production of primary aluminium is done in three stages. It starts with the mining of bauxite, a reddish-brown aluminous earth found in tropical latitudes in Australia, South America, India, the Caribbean and Africa. Bauxite is then refined to produce alumina, which is then smelted to produce aluminium. To produce one tonne of primary aluminium takes two tonnes of alumina, which in turn takes four tonnes of bauxite.


Copper has a wide range of attributes which is why it has so many applications today. It was found to be a very efficient conductor of electricity and heat as well as being flexible, strong, durable and resistent to corrosion. As such it has been key to many of man's technological advances, the two biggest being telegraphic communications and electricity. But it is also widely used for heating, air conditioning, plumbing, roofing, brass fittings and for so much of the electrical environment we now take for granted: TV, radio, lighting, computers, mobile phones etc all require copper wiring, electrical leads, adapters, transformers and motors. Various copper compounds and chemicals are also used to protect plants and crops and to preserve wood. The break down of copper by use is as follows

Demand : Between 1900 and 2000, copper demand grew from 500,000 tonnes to around 13,000,000 tonnes, with growth accelerating since the 1950's. With some many widespread uses it is not surprising copper demand keeps growing and now with China, India and many other developing countries starting to industrialise and urbanise, demand is likely to grow from strength to strength. Per capita demand for copper rises as GDP per capita rises. Japan consumes around 12kg per capita, NorthAmerica consumers around 10kg per capita and Europe around 9kg per capita. The large populations of China, India, Eastern Europe and South America are all consuming less than 2kg per capita - this is a huge indicator of what lies ahead for copper demand.

Supply : Copper is not a particularly rare metal and it is produced in many countries, Chart 2 shows the geographical distribution of primary supply. Today copper supply is made up from two sources, the majority, 88%, comes from primary production, that new copper that is mined from the ground, but of growing importance is secondary supply which accounts for 12% of total refined copper supply. Secondary supply comes from recycling copper scrap.

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