OAO GMK Norilsk Nickel said that prices are high enough for it to maintain spending and output, bucking an industry trend that is forecast to result in the largest ever production cuts.

Mr Oleg Pivovarchuk deputy CEO of Norilsk said that prices at USD 9,500 to USD 10,000 a tonne will allow Norilsk to breathe freely. He added that anything below that would be a catastrophe for some producers.

He said that global nickel demand may reach 1.15 million tonnes in 2009. Consumption was 1.27 million tonnes in 2008 for a second consecutive annual decline. He added that Norilsk may also send nickel concentrate from Africa or its Kola unit in Russia for processing at its Harjavalta refinery in Finland.

Meanwhile, Macquarie Group Limited estimates that nickel has slumped more than 80% from the record USD 51,800 a tonne reached in May 2007 as supply outstripped demand. While miners have already announced production cuts equal to about 20% of world supply, prices on an annual basis may not rebound until 2010. It said that stainless steel accounts for about two thirds of nickel demand. Producers of the alloy will cut output by 36% in this quarter and 26% in the following three months.

(Sourced from www.bloomberg.net)