According to Natixis Commodity Markets, China's stainless steel production may rise as much as 15% in 2011. As a result, it may bring up the demand for nickel, the key ingredient of steelmaking. Also, NCM said that the strong output of stainless steel could illustrate the declining LME nickel stockpiles earlier in the year.
As Chinese producers started to seek higher-quality nickel ores to produce high grade stainless steel, the supply of nickel is expected to become tighter this year than that in last year. At the same time, NCM increased its base prices forecast for nickel over 2011 and 2012. It predicted that the nickel average base prices would be at USD 25,300 per tonne in 2011 and it would soar further to USD 26,500 per tonne in 2012.