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August 8, 2008

Indonesia’s Inco H1 profit drops 58%

PT International Nickel Indonesia Tbk (INCO), one of the world’s top nickel producers, said on Thursday its net profit dropped 58.2 percent in the first half of this year, due to nickel price drop despite higher sales volume, reported Reuters.

Inco booked sales revenue of $819.2 million in the January to June period 2008, down 37.3 percent from $1.3 billion in the same period a year ago, said Reuters.

Net profit fell 58.2 percent to $295.6 million in the first half from $707 million in the same period last year at the firm, which is 61 percent owned by Brazil’s Companhia Vale do Rio Doce VALE5.SA through Canada’s Inco Ltd.

The price of nickel used in stainless steel has fallen 50 percent since hitting a high of $35,950 a tonne this year as the market priced in lower demand from stainless steel mills.

Nickel MNI3 was untraded at the close of London Metal Exchange trade on Wednesday, but bid at $17,800 a tonne, after earlier hitting $17,370 a tonne, the lowest since June 2006.

In the first half of 2008, Inco’s average nickel sales price was $22,477 a tonne, down from $38,926 a tonne in the same period last year.

The firm sold 36,961 tonnes of nickel in matte in January-June this year, up from 36,808 tonnes year ago.

Production of nickel in matte in the first half also fell 4.9 percent to 37,151 tonnes, against 39,052 tonnes a year ago on a scheduled shutdown in the second quarter, originally slated for the first quarter, as well as unplanned equipment repairs.

“We had to repair one rotary kiln due to bullgear spring problems and a failure at one electric furnace that affected production by approximately 1,800 metric tonnes,” Arif Siregar, Inco’s chief said.

Despite lower production in the first half of the year, Inco was maintaining its forecast for production of nickel in matte at 77,000-79,000 tonnes for this year, Siregar said.

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