Higher World Ni Oversupply in 2010, Sumitomo Metal Mining

World nickel supply will be 38,000 tonnes more than the demand in 2010, according to outlook by Sumitomo Metal Mining. The firm expects the supply will reach the first 1.4 million tonnes in the year after termination of strike at the major supplier while the demand in stainless steel increases in China under firm economy growth. The higher supply contributes to wider oversupply from 30,000 tonnes of oversupply in 2009.

The firm expects the supply will increase by 10.5% to 1.402 million tonnes in 2010 from 2009. The supply increases by 10,000 tonnes per month after the strike will end in the first half year at Sudbury mine and refinery, Canada of Vale Inco. The supply increases by 20,000 tonnes from Goro nickel project with 60,000 tonnes of production capacity in New Caledonia, which starts operation in the first half year.

Sumitomo Metal Mining expects the demand will increase by 10.1% to 1.364 million tonnes in 2010 from 2009. Chinese demand, which represents a third of the world demand, will increase by 6.9% to 460,000 tonnes. The firm estimates world stainless demand, which represents around 70% of nickel demand, will increase by 8.4% mainly in China.

The firm estimates world nickel production decreased by 6.9% to 1.268 million tonnes in 2009 from 2008 due to 6-month long strike at plant with annual 110,000 tonnes of output capacity at Vale Inco. The demand decreased by 3.9% to 1.238 million tonnes.