Nickel Set For Sharp Price Rise As Fundamentals Improve- Eramet

LONDON, Feb. 18 -- The outlook for the nickel market is "very positive" with potentially sharp price increases likely through 2011, the chairman and chief executive of French mining group Eramet (ERA.FR) said Thursday.

Speaking on a conference call, Patrick Buffett said that the metal, a key ingredient in the production of steel, is facing supply constraints at a time of rising consumption growth.

"Historical nickel deposits are nearing their end of life and new deposits are far more difficult to develop," Buffett said. "Nickel is capital intensive, technology-intensive...non-governmental organizations often delay commissioning of new projects and make them more costly," he added.

At the same time, Buffett said he expects "high growth" from emerging economies. China imports around 80% of its nickel needs, he noted.

"This will create a potential shortfall in supply....if there's too big a lag in the introduction of projects and could bring about a sharp hike in the price of nickel," he added.

Nickel is currently trading at levels last seen in May 2008, at around $29,000 a metric ton.