Risk Warning: Your Capital is at Risk.
In this guide to trading natural nickel, we’ll explain how and where you can trade this precious metal as a commodity. We also list markets and regulated brokers that are available in your country.
In a hurry? If you want to get started trading nickel, here are platforms available in to consider:
Disclaimer: Availability subject to regulations.
Between 74-89% of retail investor accounts lose money when trading CFDs.
Contents
Why Trade Nickel?
Traders may consider trading nickel for the following reasons:
- Bet on Stainless Steel Demand
- Inflation and Weak US Dollar Hedge
- Portfolio Diversification
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Bet on Stainless Steel Demand
Expanding global demand for stainless steel products could contribute to a rise in nickel prices.
China continues to urbanize and industrialize its economy. Industrial and mining equipment, tanks, buildings and bridges are just a few of the applications where nickel could be used.
The United States is expected to embark on major infrastructure projects over the next several years. Bridges, railways, airports and other projects require major upgrades.
All of these projects will require significant engineering resources, and nickel should play a role in building many of these projects
Inflation and Weak US Dollar Hedge
Trading nickel is a way to bet on a weak US dollar and higher inflation.
Nickel is priced in US dollars, so the performance of the American economy can impact its price. The US Federal Reserve Bank has kept interest rates low and the US dollar weak for many years.
US central bankers are likely to continue these policies to support consumer borrowing and spending. These conditions are likely to be very beneficial for all commodity prices including nickel. A weak dollar could stoke inflation concerns.
There is a limited supply of nickel, and producing it is an energy-intensive endeavor. The price of the commodity would likely benefit from inflation fears.
Portfolio Diversification
Most traders keep the vast majority of their assets in stocks and bonds. Commodities such as nickel provide traders with a way to diversify and reduce the overall risk of their portfolios.
Where Can I Trade Nickel?
Start your research with reviews of these regulated brokers available in .
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74%-89% of retail investor accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
How to Trade Nickel
Traders have several ways for gaining exposure to nickel prices:
| Method of Investing | Complexity Rating (1 = easy, 5=hard) | Storage Costs? | Security Costs? | Expiration Dates? | Management Costs? | Leverage? | Regulated Exchange? |
|---|---|---|---|---|---|---|---|
| Nickel Bullion | 1 | ✅ | ✅ | ❌ | ❌ | ❌ | ❌ |
| Nickel Futures | 5 | ❌ | ❌ | ✅ | ❌ | ✅ | ✅ |
| Nickel Options | 5 | ❌ | ❌ | ✅ | ❌ | ✅ | ✅ |
| Nickel ETFs | 2 | ❌ | ❌ | ❌ | ✅ | ❌ | ✅ |
| Nickel Shares | 2 | ❌ | ❌ | ❌ | ❌ | ✅ | ✅ |
| Nickel CFDs | 3 | ❌ | ❌ | ❌ | ❌ | ✅ | ✅ |
Nickel Bullion
Physical nickel bullion such as bars or coins is the most direct way to speculate on nickel prices.
However, purchasing bullion requires a secure storage facility. Ultimately, the cost of this storage and the low value-to-weight ratio could make holding physical nickel an impractical proposition.
Nickel Futures
Futures are a derivative instrument through which traders make leveraged bets on commodity prices. If prices decline, traders must deposit additional margin in order to maintain their positions. At expiration, the contracts are physically settled by delivery of the metal.
The London Metals Exchange (LME) trades a contract on nickel that is a minimum of 99.80% pure. Each contract represents 6 metric tons of nickel and is quoted in dollars.
Nickel futures trading requires a high level of sophistication since factors such as storage costs and interest rates affect pricing.
Nickel Options on Futures
Options are also a derivative instrument that employs leverage to trade commodities. As with futures, options have an expiration date.
However, options also have a strike price, which is the price above which the option finishes in the money. Options buyers pay a price known as a premium to purchase contracts.
An options bet succeeds only if the price of nickel futures rises above the strike price by an amount greater than the premium paid for the contract. Therefore, options traders must be correct about the size and timing of the move in nickel futures to profit from their trades.
The LME offers and options contract on nickel futures.
Nickel ETFs
These financial instruments trade as shares on exchanges in the same way that stocks do. There are currently two exchange-traded funds (ETFs) that trade nickel futures:
| iPath Dow Jones-UBS Nickel ETN | iPath Pure Beta Nickel ETN |
|---|---|
Shares of Nickel Companies
There are many publicly traded companies that have some exposure to nickel prices. While investing in companies can be a leveraged way to gain exposure to nickel prices, many of these companies have significant exposure to other metals and commodities prices.
In addition, factors such as company management and the overall stock market can also affect these financial commitments:
| Company | Current Price | Overview | Listings | Founded |
|---|---|---|---|---|
Glencore | International commodity trading and mining company | London (LSE) Hong Kong (SEHK) Johannesburg (JSE) | 1974 | |
Pure Nicke | Engages in the acquisition, exploration and development of mineral properties in Canada. | Vancouver (VSE) | 1987 | |
BHP Billiton | Anglo-Australian multinational mining, metals and natural gas company. | London (LSE) New York (NYSE) Johannesburg (JSE) Sydney (ASX) | 1885 |
Contracts for Difference (CFDs)
One way to trade nickel is through the use of Contracts for Difference (CFDs) derivative instrument. CFDs allow traders to speculate on the price of nickel.
The value of a CFD is the difference between the price of nickel at the time of purchase and its current price.
IMPORTANT: CFDs are not available in the USA due to local regulation, and regulated brokers do not accept US citizens or US residents as clients.
Should I Trade Nickel?
There are two trends that could raise nickel prices in the years ahead:
- Chinese demand
- Infrastructure demand
Important: This is not investment advice. We present a number of common arguments for and against investing in this commodity. Please seek professional advice before making investment decisions.
Chinese Demand
China is the top consumer of nickel and could increase its consumption in the years ahead.
The Chinese economy has experienced a slowdown in recent years, although there are signs this may be coming to an end. Essentially, a long-trade on nickel is a bet on a resurging Chinese economy.
Infrastructure Demand
Construction and infrastructure could represent a very large percentage of future nickel demand. Most of these projects will require large quantities of metals including nickel.
However, traders should also consider the risks of speculating on nickel prices:
- A global recession could weaken Chinese demand and put infrastructure plans on hold. Overproduction of the metal or increased stockpiling by China could create a supply overhang on the market and send prices lower.
- Global economic or political turmoil could strengthen the US dollar and weaken demand for commodities.
Further Reading
If you want to learn more about precious metals, and other metal commodities trading, see the following guides from our experts:
- Learn More About Nickel
- Gold Trading Guide
- Silver Trading Guide
- Platinum Trading Guide
- Palladium Trading Guide
