China's nickel price will remain sluggish in a short term but the room for further decline is limited, according to the Ministry of Commerce (MOC).

   The No. 1 nickel price kept on falling for three weeks ended on May 31 to touch 206,000 yuan/ton, 3.3 percent lower than the previous week and 14.3 percent below that at the end of April, monitored MOC.

   The decline was attributed to the weak stainless steel market in April-June that has slashed the demand for nickel.

   Four large stainless producers declared to cut the output by 50 percent in May. Taiyuan Iron & Steel (Group) Co., Ltd. and Baosteel (600018.SH) will slash their output by 30 percent in June. The stainless production has also been affected by the devastating earthquake in Southwest China's Sichuan Province, in which many chromium and manganese mines were severely damaged.

   The declining price on the international market also boosted that in China. The spot price for LME nickel averaged 26,061 US dollars/ton in May, setting a new low record since February 2006.

   Although LME nickel inventory in May decreased by 7 percent from April to 48,504 tons, it was unlikely to rally the sentiment, MOC explained.