Disovered in 1751, nickel held very little value to industry until Michael Faraday, in 1820, discovered that adding nickel, strengthened iron. Later development would produce nickel steel in 1885, which tests sponsored by the U.S. military, showed made superior weaponry. This use has made nickel a critical commodity in time of warfare. Nickel and cobalt are used today in the production of superalloys used in jet aircraft and missiles, among mumerous other military uses.
Traditionally, warfare in the 20th century has increased demand and caused spikes in nickel prices. During the Korean conflict, US plants could not produce enough nickel to keep up with wartime needs. The government was forced to take control of over all U.S. production and until 1957, it controlled production and nickel inventory stocks in the US. The governement relinguished control over nickel four years after the cease fire was signed only after building a national strategic stockpile. By the beginning of US involvement in the Vietnam conflict, Canadian producers, Inco and Falconbridge accounted for 48% of world nickel production. Canadian labor strikes in 1969 decreased Canadian production just as wartime needs for nickel increased. As new mines and processing plants came online in countries such as Australia, New Caledonia, and the Dominican Republic, Canadian producers would lose their world domination and diminish their ability to set nickel pricing.
Prices would gradually increase over the next decade as demand for nickel increased. Once again a labor stirke at Inco would cause a serious jump in prices in 1978 and in 1979 nickel became the seventh metal to be traded on the London Metal Exchange. Nickel prices would now be set by worldwide supply and demand. After increasing in price by 33% in two years, the ending of the Inco strike would bring about a surplus of nickel and prices would free fall to near pre-strike levels and continue to slide until 1987. 1986 ended with pricing as low as it had been in years selling for $1.60 per pound. Many world producers of nickel had discontinued production and the stage was set for the industry to be caught off guard. Stainless steel usage in 1987 increased dramatically and demand exceeded supply. The Dominican Republic government levied a huge duty on exported nickel, which forced Falconbridge, who maintained the Dominican mines, to cancel shipments. By April of 1988, nickel prices had soared to an all time high of $8.17 per pound.
While nickel demand remained strong, producers were finally able to catch up and nearly as quickly as prices had sky rocketed, they free falled. The decrease in price continued when in 1991 the fall of the Soviet Union meant a new and powerful player would add more nickel producing capacity to the world stage. Norilsk Nickel, the world's largest producer of nickel, would begin to export heavily as demand in the former military government crumbled. This would further depress prices except for a slight surge in 1995 when an explosion and fire at a power plant would temporarily cripple Norilsk's ability to produce and ship nickel, while at the same time a major earthquake in Japan would increase the demand in stainless for reconstruction. A depressed Far East economy would drive prices back down as stainless demand fell.