Nickel Price: More Expensive Than in the 1950’s and 1960’s

Historical Inflation Adjusted Nickel Price since 1900 in Pounds Sterling and US Dollars

Nickel is used in many industrial applications and sectors, from a corrosion resisting additive in steel to elements in batteries and catalyst for hydrogenation. This makes it an important commodity to examine its historic price and inflation adjusted price.

The annual average copper price data since 1900 to 2010 came from the US Geological Survey.  The historical UK Pound to US Dollar exchange rate data came from Lawrence H. Officer, "Dollar-Pound Exchange Rate From 1791", MeasuringWorth, 2011 at www.measuringworth.com/exchangepound/.  The prices were adjusted for inflation by converting the nominal price into the equivalent in 2011 US Dollars and 2011 GP Pounds Stirling.  The US inflation data came from the historical CPI from the US Department of Labor.  For the UK inflation the data came from Grahame Allen (2011) "Inflation: the Value of the Pound1750-2011" Economic Policy and Statistics Section, Research Paper 12/31, House of Commons Library, UK.  From this you get the following results shown in the graph below.

 

Historical Annual Average and Inflation Adjusted Nickel Price since 1900 in US Dollars and UK Pounds

The doted lines are the unadjusted nominal annual average nickel price, and the sold lines are the inflation adjusted nickel price.  The first feature that becomes obvious is that the unadjusted nickel price was at its lowest in the in 1924 in both US Dollars and Pounds Sterling at approximately $661 and £150 per a metric tonne respectively.  Furthermore before 2007 the nominal price peak occurred in 1988 to 1989 in both US Dollars and UK Pounds at approximately $14,000 and £8,000 per a metric tonne respectively.  

However when you examine the inflation adjusted nickel price, you notice that its lowest prices occurred in 1998 in both US Dollars and UK Pounds at approximately $6,400 and £3,965 per metric tonne.  The closed the inflation adjusted price came to those lows in both currencies, occurred in the mid 1920’s, late 1940’s and 1985.  The highest inflation adjusted price happened in 2007 in US Dollars and Pounds Sterling at $44,450 and £20,968 respectively.

The historic inflation adjusted nickel prices in US Dollars and UK Pounds can be more easily seen in the chart below, which only shows the inflation adjusted price on a linear axis (non logarithmic, unlike the first chart). 

Inflation Adjusted Nickel Price since 1900 in US Dollars and Pounds Sterling

As it came bee seen the general trend in the inflation adjusted nickel prices showed a steady decrease from 1900 until the early 1920’s, were upon it stayed fairly constant until it decreases slightly to reach one of its lowest prices in the late 1940’s.  From then it rose back to the average price seen the 1920’s and remained relatively stable until the late 1960’s.  In the late 1960’s the inflation adjusted price rose rapidly by over 30% and fluctuated around this new prices for much of the 1970’s.  In the late 1970’s and early 1980’s the price consistently dropped until it bottomed in 1986 at an inflation adjusted price close to that in the late 1940’s.

In the late 1980’s the nickel price exploded in just a few years to reach equal the inflation adjusted high not seen since the early part of the 20^th century at $26,300 in US Dollars.  In UK Pounds Sterling the price peak in the 1980’s only reached the inflation adjusted price seen the 1970’s at £17,000, because of the strength of the Pound relative to the Dollar.  In both US Dollars and Pounds Sterling the nickel price dropped back in the late 1990’s and early 2000’s.  In the late 200’s the price rocked as it did in the mid 1980’s to reach an all-time inflation adjusted price of $40,500 and £21,000.

Using the price in 1900 as a baseline the inflation adjusted nickel price in UK Pounds and US Dollars was indexed.  This allows the examination of the relative price changes during this historical period of time more easily and is shown below.

Historical Inflation Adjusted Nickel Price since 1900 in US Dollars and GB Pounds, Indexed to 1900

The indexed price data clearly displays that the historic inflation adjusted nickel price has been volatile and had not dropped like the inflation adjusted aluminium price had done.  By the late 1990’s and early 2000s the nickel price dropped to between 30 to 40% of the price of what it was in 1900.  The all-time low occurred in the late mid 1920’s, late 1940’s and mid 1980’s.  The current nickel price by the beginning of 2011 is comparable to the inflation adjusted prices in the late 1970s, which is slightly higher than the average since the beginning of the 20^th century.  This is easier to see from the graph below where the inflation adjusted price is indexed to that in 1971. 

Historical Inflation Adjusted Nickel Price since 1900 in US Dollars and GB Pounds, Indexed to 1971

So from a historical perspective once inflation has been accounted for, the price of nickel is comparable to the peaks seen in the late 1970s.  This begs the question, as nickel is used in so many industries and industrial applications, does this means the developed economies are due to repeat the economic difficulties that were experienced in the 1970s?

Written by Inflation Monkey. Join on Google+