A Nickel For Your Thoughts? Take A Look At This Nickel ETN

Another commodity that is a direct play on China's economy is nickel, but nickel certainly doesn't garner the headlines that copper, gold, coal and steel do.

That said, nickel is a key component in the production of stainless steel, so if steel production ramps up in earnest in 2010, nickel prices could jump. For now, analysts expect nickel prices to remain below $10/lb in 2010 as high nickel inventories are whittled down.

About two thirds of the nickel mined and smelted worldwide is used to make stainless steel. Another 12–15% goes into superalloys used in aviation and aerospace applications, according to press reports.

Nickel prices are held hostage to steel demand, but have been getting a boost lately due to increased demand from alloy producers and short-covering by commodities traders.

If you're bullish on nickel as a trade or a long-term play, you might want to take a look at the iPath DJ AIG Nickel TR Sub-Index ETN (NYSE: JJN). JJN is up 40% year-to-date and as one of the more thinly traded ETNs you'll find, JJN is a volatile issue. Still, JJN is the best way to play rising nickel prices without getting directly involved in the risky futures market.