Economist believes nickel demand will improve as year ends

Mr David Wilson senior economist at Norilsk Nickel said that flagging nickel demand should pick up slightly by the end of 2008. But, he admits this probably won't force a rebound in nickel's price since the demand bump will be marginal against this year's global production increases.

He said that the level of demand growth and supply expansion remains under debate by other market observers. But what is undeniable is that previous year price explosions in nickel and continued volatility this year, even as 2008 prices are sliding, have impacted the market in a number of ways.

He further added that foremost is that stainless steel producers, the biggest consumers of nickel, have expanded use of nickel bearing scrap or secondary smelted nickel instead of the primary metal. Atop that, stainless steel crude steel production decreased in the first half of 2008 by 1.8% compared with the same period of 2007.

Lately, the Asian and European stainless markets have not seen an expected pickup in demand normally associated with autumn.