India's nickel consumption to rise 10 pct - industry

By Biman Mukherji

NEW DELHI (Reuters) - India's nickel imports are set to rise 10 percent this year, helped by a sharp fall in world prices and rising consumption of stainless steel in the fast growing economy, a top industry official said on Tuesday.

Two-thirds of nickel output is used to make stainless steel. India, which does not produce the metal, is likely to buy 45,000 tonnes in 2007, N.C. Mathur, president of the Indian Stainless Steel Development Association, said.

Last year, India had imported about 40,000 tonnes of nickel.

Mathur said India's heavy investment in construction of high-rise buildings, heavy machineries and bridges was boosting demand for stainless steel.

A sharp slide in nickel prices from an all-time high of $51,800 a tonne in May has also boosted demand. Three-month nickel was trading at $29,400 on Tuesday.

"I think the prices will average $25,000 to $28,000 per tonne for the rest of the year. For 2008, it will probably be between $20,000 to $25,000," Mathur said.

Russian supplies of nickel scrap and a worldwide trend to move towards low nickel content stainless steel is likely to keep prices down, he said.

Domestic sales of stainless steel are likely to rise to 550,000 tonnes in the December quarter from an estimated 500,000 tonnes in the current quarter, Mathur said.