NICKEL-Major market developments in July

LONDON Aug 7 (Reuters) - Soft demand from the key stainless steel sector and plentiful stocks point to further nickel price weakness in the remainder of the year, some analysts say.

But others believe the stainless steel industry, which accounts for about two-thirds of nickel consumption, will recover in the final quarter to lift prices.

"Stocks are comfortable and stainless production has not been performing that well in the second half of the year," said independent consultant Angus MacMillan.

He said $15,000 a tonne was an obvious target for prices before the end of 2008.

The London Metal Exchange (LME) three-months nickel price (MNI3> was last indicated at $18,650/850 a tonne. Prices jumped sharply on Thursday as funds covered their short positions -- bets on lower prices.

In its latest report, Standard Chartered said the market should be helped by output cuts by high-cost nickel pig iron producers due to tumbling prices. But nickel was expected to head lower again longer term.

Another analyst expected a recovery in prices to $20,000-21,000 a tonne by October, boosted by improvements in the main stainless conuming markets in Asia and Europe.

PRODUCTION:

July 31 - Shareholders of PT International Nickel Indonesia (INCO.JK) have approved a sharply higher cost estimate for a planned hydro-electric power plant, the company said. Inco has revised the cost estimate to build the Karebbe dam to $410 million from an initial estimate of $275-280 million. The dam, which is expected to start operating in the first half of 2011, will help boost the company's production to about 200 million pounds of nickel in matte annually. The company is 61 percent owned by Brazil's Vale (VALE5.SA) (RIO.N).

July 31 - Australia's Albidon Ltd (ALB.AX) said it plans to expand its concentrator at its Zambia nickel mine after it is fully commissioned in 2009. The company said it intended to expand the concentrator to 1.2 million tonnes per year (tpy) from 900,000 tpy to achieve nickel output of 10,000 tpy.

July 30 - Russia's Ufaleynickel said it has temporarily suspended production from July 28 to August 6 to repair its equipment. The company did not say if output would be affected. In May, the company said it aimed to produce 14,000-16,000 tonnes of nickel in 2088 compared with 14,144 tonnes last year.

July 30 - Australia-based Mirabela (MBN.AX) (MNB.TO) said it would increase the size of its Santa Rita nickel mine under development in Brazil to yield 40 percent more nickel after it starts up next year. Under the plan, the crushing capacity of the ore treatment plant will be increased to 6.4 million tpy.

July 29 - China has signed a production sharing deal for a nickel venture in northern Myanmar, the official Xinhua agency said, but gave no details on the size of the investment or China's stake. The agreement between the China Non-Ferrous Metal Group Company Ltd (CNMC) and the state-run No. 3 Myanmar Mining Enterprise covers nickel production from the Tabeikkyin area of Mandalay division. It was not clear if the deal was the same as a $600 million nickel project suspended late last year amid political unrest and disagreement over the size of the government's stake.

July 25 - Pacific Metals Co Ltd (5541.T) said it has resumed operations at its 40,000 tpy Hachinohe ferro-nickel plant in northern Japan after an inspection following a strong earthquake in the region.

July 24 - Mirabela said it will start nickel production at its Santa Rita mine in Brazil by mid-2009. The firm made a deal this month to sell half of the mine's nickel concentrate output to Brazil's Votorantim Metais Niquel S.A. for five years and said it is in advanced negotiations to sell the rest to Norilsk Nickel (GMKN.MM)

July 18 - The Philippines' Berong Nickel Corp is in talks to double its long-term annual supply deal with BHP Billiton (BHP.AX) (BLT.L) to 1 million tonnes of laterite nickel ore beginning March, a company official said.

PRICES

Concerns for weak demand from the key stainless steel industry weighed on nickel prices in July. The three-months price ended the month at $18,499 a tonne, down from $21,905 a month earlier.

Prices rose to $22,599 early on, but it was downhill after that and on Wednesday they were trading around their lowest since June 2006. But on Thursday the market jumped on fund short covering.

In July, the twice-yearly Reuters base metals price poll <MET/POLL> put the median average for the LME cash nickel price MNI0 at $25,500 a tonne in 2008 and $23,000 in 2009.

A January poll generated forecasts of $28,660 and $25,000 a tonne in 2008 and 2009 respectively. In 2007 the price averaged over $36,000 a tonne.

STOCKS

LME nickel stocks edged lower again in July to end the month at 44,442 tonnes, compared with 46,692 tonnes at the end of June. Inventories are still not far off their highest levels in over eight years. In February 2007 they were around their lowest since 1991.

(3000 Xtra users can access Reuters Metal Production Database (MPD) by clicking on mpd.session.rservices.com. MPD details historical and predicted output and capacity for bauxite, copper, lead, zinc and gold mines, alumina refineries, aluminium, copper, lead and nickel smelters and copper, zinc, lead and nickel refineries between 1997 and 2011.)

(Karen Norton; edited by Michael Roddy)