China's nickel consumption in 2008 is expected to decline from last year due to falling production of stainless steel with high nickel content, a senior official at an industry association said on Friday.

    Total stainless steel output is expected to rise 10 percent to 8 million tonnes in 2008, however, due to a more than 9 percent rise in domestic demand, said Li Cheng, executive president of the Stainless Steel Council of China Special Steel Enterprises Association.

    China's production of high nickel-content stainless steel, also known as austenitic or 300 series, fell to 2.2 million tonnes in the first seven months from 2.4 million tonnes a year earlier, Li said.

    "The falling production of high nickel-content stainless steel is partly due to rising output of low nickel-content stainless steel at major producers," Li told reporters.

    As makers of stainless steel, widely used in kitchen appliances and cutlery, switch to varieties with lower nickel content, nickel prices have dropped about 50 percent from the year's high of $34,700 per tonne marked in early March on the London Metal Exchange.

    The switch had been prompted by a surge in the price of nickel, a key input in stainless steel production, to an all-time high of $51,800 a tonne in May 2007.

    The most popular 304 grade in the 300 series of stainless steel normally contains 8 to 10 percent nickel, but ferritic or 400 series stainless steel contains 1 percent or less nickel.

    Li said the ferritic variety accounted for 40 to 50 percent of total stainless steel production at leading Chinese producers such as Taiyuan Iron and Steel and Baoshan Iron and Steel. That compared with about 30 percent last year.