Nickel's fluctuating prices sparked worries in the commodities market, mainly because of China's lowering demands. The Chinese economy has always been a catalyst in the commodities market because of its influence and strong pull on prices. However, analysts believe that the Chinese economy will double in the next decade, which means there will be a bigger demand for commodities. One resource is expected to benefit from all these changes, and that is nickel.

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China's population is high enough to fuel its own economy, which is why the country is currently transitioning itself from an investment-driven to a consumer-driven economy, hence the growing of service-based industries. While this happens, China continues to use nickel for both investment and consumer economies, since more and more people are yearning for better standards of living.

This demand to have a better life quality will lead to higher demands for new vehicles, electronics, appliances, restaurants, and factory items: all of which nickel is highly applied. Newer designs of lightweight cars need nickel for the construction of its parts; electronics heavily use nickel for rechargeable batteries; restaurants use nickel through food processing systems, kitchenware, and utensils; and factory machines are made of nickel-containing stainless steel.

All of these applications need a huge supply of nickel. China is the world's biggest consumer and producer of nickel, consuming most of the supply it produces. When Indonesia turned its back on the global market, the Philippines stepped in to provide China with a cheaper alternative, Nickel Pig Iron (NPI), a resource used in making stainless steel.

However, this temporary supply can only go so far. A huge problem lies in the declining nickel ore stockpiles, and China is running out of high-grade nickel. Come June, Chinese stockpiles should start diminishing and the country is on the verge of relying on the Philippines' NPI. The rising demand for stainless steel will be affected by the NPI decline, and as a result, the nickel spot price is expected to shoot up to $16,000 per ton in the next five months. The price could increase to $20,000 per ton at the end of the year, depending on the demand.

But there is a solution for the lack of high-grade nickel supply, and it is not situated in Asia.

The factors mentioned above add to the timely awarding of production license to Russia's Amur Minerals Corporation (London AIM: AMC), a base metal company in the Amur Oblast Region in the Russian Far East. After over a decade of exploring the potential of the Kun-Manie deposit, the company can finally begin production on site. The mining license was awarded on May 22, and the company's stocks skyrocketed to almost 120 percent from May 22 to May 26.

The license worth 36 kilometers grants the company 100 percent rights to the property where more metals aside from nickel can be found. The company is also banking on the production of copper, cobalt, platinum, palladium, and other minor minerals. This upcoming streamline of high-grade nickel from Amur Minerals will hopefully keep the Chinese supply and demand cycle afloat and away from further price declines.

TagsChinese nickel supply, Indonesian Ore Ban, China steel supply, China metal supply, China commodity market, Chinese commodity market, China nickel, Nickel applications, China's nickel supply, Amur Minerals Corporation, Amur Oblast, Kun-Manie, China alternatives