China's nickel demand is rising on reduced prices and increased purchases from stainless steel and plating plants that are running at higher rates, Shenzhen Daily reported Monday.

China's largest nickel producer, Jinchuan Nonferrous Metals, cut its sale prices by 4,000 yuan (US$483) to 125,000 yuan a ton from Friday after price falls in the world market, traders said.

"Customers are comfortable to buy at 120,000 to 130,000 yuan a ton,�� a trader in Shanghai said.

Traders in China said demand from stainless steel producers, the largest consumers, which use nickel as an anti-corrosive agent, had risen on higher production in the past month.

Demand from plating plants had also increased in the past two weeks as they were gearing up production for exports.

Reduced prices were discouraging buyers from importing spot nickel, although domestic market supply was tight.

The cost of importing nickel to China, which buys about 40 percent of its needs in the international market, was about 131,000 yuan a ton, another trader in Shanghai said.

In the domestic market, nickel for prompt delivery was trading at 129,000 to 134,000 yuan a ton, against around 136,000 yuan earlier last week.

Traders said about 800 tons of nickel had been sitting in bonded warehouses for months because domestic prices were below import costs.

Benchmark three-months London Metal Exchange nickel was between US$12,150 and US$12,250 a ton by Friday, down from US$14,425 and US$14,525 June 30.

It hit a 15-year high of US$17,250 in January before easing to around US$11,000 in mid-May.

China��s major stainless steel producers had increased domestic sale prices by 700 to 900 yuan a ton in late August following higher prices for imported materials, traders said.

The producers, including Shanxi Taigang Stainless Steel and Baosteel, had cut their prices by about 900 yuan for July shipment to encourage demand and cut inventories.

Stainless steel availability had fallen on slower imports and the government��s crackdowns on smuggling in the previous few months, traders said.

Source: Shenzhen Daily/Agencies