Sumitomo Metal Mining Expects World Nickel Supply Excess in 2011

World nickel supply is expected to be excess by 20,000 tonnes in 2011, according to the supply and demand balance of nickel in the world by Sumitomo Metal Mining. The firm expected the excess was 35,000 tonnes on the previous forecast in April, but readjusted on August. The supply volume is flat on this forecast from the previous forecasts, but the demand increases from initial supposition when stainless steel output increases in mainly China. The firm revised the supply was minus at 63,000 tonnes by 11,000 tonnes against the demand in the world in 2010 from the previous expectation.

The demand is expected to increase by 5.7% to 1.573 million tonnes in 2011 from 2010, which increase by 16,000 tonnes in 2011 from the previous expectation due to increases stainless steel output.

The firm expects stainless steel production is 33.27 million tonnes in 2011 in the world, which increases by about 1 million tonnes from the previous expectation when Chinese stainless steel output increases by 500,000 tonnes from the previous expectation. The firm pointed out the demand for nickel is strong in China beyond expectation. The demand for nickel seems to be good for alloy, special steel and battery in advanced countries.

On the other hand, the supply is expected to increase by 11.8% to 1.593 million tonnes in 2011 from 2010, which increases by about 1,000 tonnes from the previous expectation. Chinese nickel pig iron output increases by 20,000 tonnes to 200,000 tonnes in 2011 from the previous expectation when stainless output is increasing and international nickel price is high at over US$ 20,000 per tonne.

However, the supply volume is expected to hit the wall by hold of operation of new project such as Vale’s project in New Caledonia.

The firm revised the supply volume increased to 1.425 million tonnes from 1.416 million tonnes in 2010 from the previous expectation, while the demand increased to 1.488 million tonnes from1.468 million tonnes due to expansion of stainless steel output in China.