Shanghai. April 28. INTERFAX-CHINA - China's nickel supply shortfall may sink to under 100,000 tons this year on the back of increasing domestic nickel production, decreasing exports and expanding nickel pig iron production, analysts said at the 2008 Nickle & Cobalt Industrial Chain Forum held in the Zhejiang provincial capital of Hangzhou last Friday.

China produced 214,000 tons of nickel in 2007, falling well short of consumption that grew to around 320,000 tons over the year, due to growth in the country's stainless steel production, according to Beijing Antaike Information, a Chinese metals market information provider.

"Domestic nickel consumption may rise 7.1 percent to 345,000 tons in 2008, on the expectation of continued growth in the domestic stainless steel industry, while China's nickel production may reach 243,000 tons up 11.93 percent year-on-year, including 100,000 tons of nickel pig iron, based on the country's current production capacity," Xuan Long, an analyst from Huawen Futures, said at the conference.

"China's nickel exports fell to 175,000 tons in 2007, mainly as a result of the government's levy of a 15 percent export tax last year. Moreover, exports are set to continue falling this year, which will further support domestic nickel supplies," Xuan said.

China refined nickel exports fell 79.5 percent year-on-year to 1,346 tons in the first quarter of this year, while refined nickel imports surged 20.7 percent to 35,688 tons during the same period.

In addition to last year's export policy, domestic nickel supplies will also be bolstered by China's increasing nickel pig iron production in recent years, which can replace nickel as a raw material for stainless steel production, analyst Hao Peigang, from Taiyuan Iron & Steel Group Co. Ltd., said.

"China's crude stainless steel production may reach between 870,000 tons and 900,000 tons in 2008, based on last year's crude stainless steel production of between 720,000 tons and 750,000 tons," said analyst Liang Weigang from the joint venture of Taiyuan Iron & Steel Group and Tianjin Pipe Corp.

Domestic spot nickel prices fluctuated between RMB 240,000 ($34,334.76) per ton and RMB 242,000 ($34,620.89) per ton today.

The nickel price on the London Metal Exchange (LME) reached $23,743.00 per ton as of 3 p.m. on April 28.