* Nickel in roubles, rupiah: http://link.reuters.com/xuf26w
* Prolonged period of prices bumping along the bottom
* Stainless steel mills living hand to mouth
By Pratima Desai
LONDON, Nov 27 (Reuters) - Nickel's spectacular fall since
the middle of last year may have come to a halt, but without
significant, enduring output cuts and stronger demand from
China's stainless steel mills the reprieve could be brief.
Benchmark nickel CMNI3 on the London Metal Exchange fell
to $8,145 a tonne earlier this week, less than half the level
seen in May last year and its lowest since the middle of 2003.
Funds reversing their bets on lower prices on the
expectation that Chinese producers may cut output since then
pushed prices back up to near $9,000 a tonne.
Speculation that miner and trader Glencore GLEN.L , the
world's fifth-largest producer of nickel, would cut output
helped buoy prices last month.
But the optimism was short-lived.
"The problem is how permanent are the cuts, will that supply
come back to the market at a later stage if prices recover and
are they going to be offset by worsening demand," said Edward
Meir, analyst at INTL FCStone.
"That's the quandary; the market is very sceptical, and so
we could have a prolonged period of prices bumping along the
bottom until we get a better handle as to what is going on."
Chinese nickel producers said on Friday they were planning
to cut 15,000 tonnes of refined metal and nickel pig-iron, a
cheaper alternative, next month. They are also planning to cut
output by 20 percent next year.
Research firm Antaike estimates China's nickel output at
about 610,000 tonnes this year, about 30 percent of global
demand estimated at around 1.9 million tonnes.
Glencore's production report at the start of November showed
the company produced 68,700 tonnes of nickel in the first nine
months of this year "from own sources".
Canada's Sherritt International S.TO has said it expects
its nickel output to total 78,000 to 82,000 tonnes this year,
down from a previous estimate of 80,000 to 86,000.
"It all boils down to the fact that a lot of production is
still profitable because of the tailwind from currencies,"
Tiberius Asset Management Chief Executive Christoph Eibl.
"Nickel in (Russian) roubles or (Indonesian) rupiah doesn't
look as bad as it looks in dollars ... the demand side doesn't
look very healthy."
Russia and Indonesia produce around 370,000 tonnes of
nickel, about 12 percent of global supplies.
Demand growth for nickel has slowed to near two percent this
year from near five percent last year and seven percent in 2013.
About two-thirds of global supply is used to make stainless
steel, most of it in China.
"Stainless steel mills have no incentive to build or hold
any inventory...they are working hand-to-mouth," said Citi
analyst David Wilson.
"Possibly the most encouraging thing right now is that LME
inventories are moving in the right direction."
Stocks of nickel in LME approved warehouses stand at around
411,000 tonnes, down more than 10 percent since early June.