UPDATE 1-Indonesia's Inco may cut '09 nickel output 20 pct
(Adds details, analyst comment)
JAKARTA, Nov 26 (Reuters) - PT International Nickel Indonesia Tbk (INCO.JK), one of the world's top nickel producers, said on Wednesday it might slash its output by a fifth next year if prices remained weak.
The Jakarta-listed company, in which Brazil's Companhia Vale do Rio Doce (VALE5.SA) has a stake, has a total production capacity of 170 million pounds (about 77,000 tonnes) of nickel in matte a year.
"But we will review it on an on-going basis...If nickel prices rebound, we would produce more," Indra Ginting, Inco's director of investor relations, told reporters.
The price of nickel used in stainless steel has slumped more than 60 percent from the beginning of this year and some mining companies have been forced to cut back output or delay projects as prices have fallen below the marginal cost of production. Nickel, which hit record highs at $51,800 a tonne in 2007, was quoted on the London Metal Exchange MNI3 at 10,300 a tonne by 0700 GMT on Wednesday, down 1.9 percent on the day.
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, Ginting said.
Analysts estimate the collapse in nickel prices from their record high last year has prompted production cutbacks of more than 100,000 tonnes on an annualised basis, equivalent to around 6 percent of global capacity, but that may not be enough to offset the collapse in stainless steel demand. (Additional reporting by Nicholas Trevethan in Singapore) (Reporting by Fitri Wulandari; Editing by Ed Davies)
