By Leia Michele Toovey- Exclusive to Nickel Investing News

The global economic slowdown has impacted the stainless steel market, which has in turn curbed demand for nickel.  Now, nickel market participants are struggling to stay afloat. The price of nickel used in stainless steel has slumped more than 60 per cent this year, and many miners have already shut down or idled operations as prices have dropped below the marginal cost of production.

Nickel hit a record high of $51,800 a tonne in 2007, and is now selling around $10,300 a tonne on the LME. Analysts estimate that the collapse in nickel prices has prompted production cutbacks of more than 100,000 tonnes on an annualized basis, equivalent to around 6 per cent of global capacity. However, skeptics question whether this will be enough to offset the collapse in stainless steel demand.

Company News

Norilsk Nickel’s rival shareholders agreed on Tuesday to resolve a management dispute and postpone any talk of a merger with one-quarter owner United Company RUSAL for three years. “We have overcome our differences, which you may believe were not simple, have turned over a page and start our relations from a blank page,” Vladimir Potanin, Norilsk chairman told reporters.  Potanin said neither he nor Oleg Deripaska, UC RUSAL’s majority owner, would stand for election to Norilsk’s board at an extraordinary meeting scheduled for Dec. 26.The new board will be chaired by one of three independent directors. Potanin said that UC RUSAL was no longer opposed to the buyback of Norilsk shares by the company on which Norilsk had spent some 26 $940 million before it was blocked by a court at UC RUSAL’s request. UC RUSAL and Interros have clashed over management since UC RUSAL bought its 25 percent-plus-two-shares stake in Norilsk in April.

Norilsk Nickel, may temporarily close down some of its overseas units amid a global slowdown for commodities, the chief executive said Thursday. Vladimir Strzhalkovsky, said the company will pare back domestic investment to $1.3 billion, $700 million less than planned, as the global financial crisis takes its toll on Russian metal companies. The world’s largest miner of nickel and palladium recently halted production at its Cawse project in Australia, and Strzhalkovsky said the company may also cut production at some of its other non-Russian assets. Norilsk has operations in South Africa, Botswana, Australia and Finland. The company will not pay out dividends this year because of “crisis conditions” and would see a drop in full-year profits on the back of plunging commodity prices.

The falling price of nickel has prompted BHP Billiton to write down its operations on the South Coast, and has left analysts wondering when BHP’s newest project will be cut. BHP’s Ravensthorpe Nickel project, a $2 billion nickel laterite project that was considered risky at its launch earlier this year; but the company maintained it would reach its 50,000 tonne a year capacity by 2010. Since then, a drop in the price of base metals and global economic uncertainty has forced a number of struggling Western Australian nickel miners to suspend, or scale back, operations. BHP Billiton has said little about the project’s progress but maintains it will continue to review the operating performance and future value of both operations.

PT International Nickel Indonesia, one of the world’s top nickel producers, said on Wednesday that it will slash output by up to 20 per cent if nickel prices remain weak. The output cut will be temporary, and as soon as the market conditions improve Inco will increase output. The company expects production this year to be lower than an initial target of 77,000-79,000 tonnes of nickel in matte as it has shut down a diesel generator to cut energy costs.

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