27/04/2009 - 10:07

http://www.euroinvestor.co.uk/news/s...

LONDON, April 27 (Reuters) - The global nickel market will be in an 80,000 tonnes surplus in 2009, as falling demand continues to outpace cutbacks made by producers, the International Nickel Study Group (INSG) said.

The Lisbon-based group said it expected world production to fall to 1.26 million tonnes this year and consumption to 1.18 million tonnes.

"No recovery in primary nickel demand and stainless steel production is anticipated until at least the second half of 2009," the INSG said in a statement following a meeting late last week.

Around two-thirds of nickel is used in the production of stainless steel.

In October the group predicted a 110,000 tonnes surplus in nickel this year. Since then a swathe of producers have announced cutbacks in response to poor demand.

The INSG said the 2009 output forecast did not include any adjustment factor for possible production disruptions.

The group said primary nickel output last year was 1.39 million tonnes, down from 1.42 million in 2007.

Global primary nickel usage was 1.29 million in 2008, compared with 1.31 million tonnes in 2007.

(Reporting by Karen Norton; editing by Sue Thomas)

((karen.norton@thomsonreuters.com; +44 20 7542 3055))