Nickel producers fend off output cuts as losses mount

Fri Aug 2, 2013 2:25am EDT
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* French miner Eramet warns of full-year operating loss

* Nickel miners likely to unveil more writedowns and losses

* Miners continue to stick to production plans

By Melanie Burton and James Regan

SINGAPORE/SYDNEY Aug 2 (Reuters) - Nickel miners are clinging to plans to maintain production, despite a growing supply glut and prices around four-year lows, raising the risk of more writedowns and losses being unveiled in the current financial reporting season.

France's Eramet this week reported a first-half operating loss and warned the second half would be worse due to weak nickel prices, while other top producers such as Vale SA , Glencore Xstrata and BHP Billiton report in the next few weeks.

Between a quarter to a half of the nickel sector could be running at a loss, according to industry estimates, hit by weak demand from China, the world's top producer and consumer of stainless steel. Nickel is a key component of stainless steel.

Nonetheless, few miners have yet made deep cuts in output and the trend is set to put more pressure on depressed prices.

"It's a staring contest, no one wants to be the first to take the pain," said Robin Bhar, an analyst at Societe Generale in London.   Continued...