NICKEL-Major market developments in August

LONDON, Sept 9 (Reuters) - Rising supply and disappointing demand from the key stainless steel sector will continue to pressure nickel prices, some analysts say.

But others believe recent production cutbacks will help support the market and limit the downside.

"Nickel has more downside potential and will probably fall towards $15,000," said independent consultant Angus MacMillan.

"Supply disruptions are helping, and demand should pick up a bit after the summer, but there are plenty of stocks and new capacity is coming on-stream," he added.

But Will Adams of Basemetals.com thought nickel would find good support at $18,000, expecting recent production cuts to reverse the recent uptrend in LME inventories.

He said a short covering rally might take prices up to $20,000, but on the whole expected them to trade in a $17,500-19,500 range in the next couple of months.

The London Metal Exchange (LME) three-months nickel price MNI3 was last indicated at $18,600/800 a tonne.

Another analyst said he saw the potential for big surpluses in nickel, expecting a general economic downturn to hurt the stainless steel sector at a time when several new nickel projects were starting up.

Below are detailed some of the more significant recent developments in production, stocks and prices that may influence the direction of the market in 2008.

PRODUCTION:

August 29 - The Australian partner in a $1.7 billion nickel project being built in Papua New Guinea was hopeful construction work would resume later that day after an attack on Chinese workers earlier in the week shut down operations. Landowners at the Ramu mine site in Basamuk province attacked Chinese workers and shut the gates over delays in holding a mining review to discuss working conditions at the project, majority-owned by China Metallurgical Construction Group Corp (MCC). Australia's Highlands Pacific Ltd (HIG.AX) holds an 8.6 percent interest in Ramu, which is set to produce 31,150 tonnes per year (tpy) of nickel starting in late 2009.

August 27 - Vale Inco (VALE5.SA) has fallen further behind schedule in its efforts to begin installation of a waste pipe at its Goro nickel project in New Caledonia, but said the mine is still on budget and on target. A company spokesman said the mine was still targeted for commissioning in late October or early November.

August 21- Australia's Oz Minerals Ltd OZLK.AX said it is continuing to review its operations in the face of declining metals prices. A company official said there were currently no plans to curtail any businesses, though the company's operations remained under constant review.

August 20 - BHP Billiton (BLT.L) (BHP.AX), the world's third-biggest producer of nickel, said it is not planning any changes to its Australian nickel-making operations, despite declining world prices for the metal. The company, which in June idled its Kalgoorlie nickel smelter and Kwinana refinery in western Australia for four months of repair work, was operating its mines and other processing facilities as normal, a spokeswoman said.

August 19 - Xstrata Plc (XTA.L) said it was suspending operations at its Falcondo ferronickel mining operation in the Dominican Republic, as a result of market conditions. The shutdown is expected to last four months, during which time furnace repairs and crucial maintenance activities will be conducted, the company said.

August 11 - Finnish miner Talvivaara (TALV.L) said it is set to start production at its Sotkamo mine in northern Finland on schedule on October 1, and within budget. The company is estimating its annual output of nickel at 33,000 tonnes, and has a 10-year agreement with Russia's Norilsk Nickel (GMKN.MM) for all of it.

August 11 - European Nickel Plc (ENK.L) said it sees approval of the forestry permit application for its Caldag nickel laterite project in Turkey in the "relatively near term" as it took Turkish environmental ministers to visit a successfully rehabilitated site in Canada.

August 8 - Indonesia's state-owned miner PT Aneka Tambang Tbk (ATM.AX) (ANTM.JK) said it would tap nickel ore for its smelters from its mines in North Maluku after a contract with PT International Nickel Indonesia (INCO.JK) (Inco) ended. Nickel deposits in Antam's Halmahera mines in North Maluku in western Indonesia should be sufficient for 30 years, an official said.

August 7 - Australia's Minara Resources Ltd MRE.AX said it had to defer its Australian $273.5 million nickel expansion plan due to high costs. A heap leach expansion, increasing the firm's annual output of nickel by around 8,000-10,000 tonnes per year by the end of 2009 had to be postponed.

August 7 - Russia's Ufaleynickel said it has restarted operations after a temporary shutdown for repairs. A spokeswoman could not say how the shutdown of the plant from July 28 to August 6 will affect output.

August 6 - Xstrata said it is targeting a doubling of nickel production within five years, rivalling the dominance of bigger sector firms in Russia, Brazil and Australia. Xstrata expects to produce around 110,000 tonnes of nickel this year.

PRICES

Nickel prices ended August at $20,400 a tonne, up from $18,499 a month earlier.

But early weakness took the three-months price to $17,370 on June 6 and to its lowest levels since June 2006. At that stage the market was down one-third from end-2007 levels.

Continued soft demand from the key stainless steel sector weighed on sentiment, but the market had become oversold and managed to recoup its earlier losses, helped by further supply worries.

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, which had been easing lower since late April, moved higher again in August. At the end of last month they stood at 48,228 tonnes compared with 44,442 tonnes a month earlier.

Continued weak demand from the key stainless steel sector has been exacerbated by the seasonal summer slowdown in the northern hemisphere.

Inventories are not far off their highest 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; editing by Michael Roddy)