Sumitomo Metal Mining Expects Lower Nickel Oversupply in 2008

Sumitomo Metal Mining revised the nickel surplus estimation downward to 37,000 tonnes for 2008 compared with original 54,000 tonnes. The firm expects the output is 1.42 million tonnes, which is 20,000 tonnes lower than original mainly due to output reduction by BHP Billiton’s Cerro Matoso ferronickel plant in Colombia. The firm keeps the demand estimation at 1.383 million tonnes. Cerro Matoso plant’s output will decrease by 6,000 tonnes in the year to June 2008 due to strike from 51,000 tonnes in nickel in previous year. However, the world output will increase by 5.8% in 2008 from 2007 when the suppliers try to expand the operations including Ravensthorpe project, at which BHP Billiton launched high pressure acid leach operation in late 2007. The consumption will increase by 7.4% in 2008 from 2007 after 4.9% drop in 2007 due to inventory adjustment. However, stainless demand recovery delays and Chinese stainless makers reduce the operations in May and June. Sumitomo Metal Mining expects nickel pig iron output will increase by around 17% to around 100,000 tonnes in 2008 from 2007 though the number is excluded from the world nickel supply estimate. However, the firm expects the blast furnace nickel pig iron operation could decrease due to the high cost.