Money

Nickel may see larger market deficit this year

By Jae Hur and Ichiro Suzuki (China Daily)
Updated: 2010-07-15 10:15

TOKYO - The nickel market may swing into a greater deficit than expected this year because of supply disruptions and greater Chinese demand, which could boost prices, said Sumitomo Metal Mining Co, the biggest producer in Japan.

World demand may exceed supply by 40,000 metric tons this year, up from the company's forecast in April this year of 36,000 tons, Toru Higo, general manager of the Tokyo-based company's nickel sales and raw material department, said on Tuesday in an interview.

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This would be the first deficit since 2006, after a surplus of 27,000 tons last year, he said.

The price of nickel has tumbled 28 percent to $19,550 a ton after touching a two-year high on April 16, as concern that Europe's debt crisis and Chinese steps to curb property prices will hurt global growth, reducing demand for stainless steel in homes and buildings.

About two-thirds of nickel production is used to increase corrosion resistance in stainless steel.

"A longer-than-expected supply disruption may help the deficit widen further," Higo said.

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