TOKYO, Dec 25 (Reuters) - A global nickel market deficit will nearly halve to 49,000 tonnes in 2019 from 93,000 tonnes this year on higher output of primary metals by global suppliers and of lower-grade nickel pig iron (NPI) in Indonesia, Sumitomo Metal Mining said on Tuesday.
Sumitomo Metal, Japan's biggest nickel smelter, said global demand for nickel is seen increasing by 3.4 percent in 2019 from this year to 2.339 million tonnes, while supply is expected to climb 5.5 percent to 2.29 million tonnes.
"We expect to see higher demand for stainless steel and rechargeable batteries next year," Masanori Ohyama, general manager of Sumitomo Metal's nickel sales and raw materials department, told reporters.
Nickel is mainly used in stainless steelmaking, but is also a vital ingredient for the lithium-ion batteries used to power electric vehicles, where demand is set to accelerate over coming years.
"As for supply, we expect an expanded production of NPI in Indonesia and a pick-up in output from class I producers," Ohyama said, referring to the producers of high-purity metal with more than 99.8 percent nickel content. NPI usually has less than 12 percent nickel content.
The roughly 2.2 million tonne-a-year nickel market will likely register a deficit of 93,000 tonnes in 2018, widening from 77,000 tonnes in 2017, according to the company.
Sumitomo Metal, which supplies cathode materials for Panasonic Corp lithium ion batteries that are used in Tesla Inc electric vehicles, said the use of nickel in rechargeable batteries will boost global demand of the metal by around 20,000-25,000 tonnes in 2019 to around 140,000-150,000 tonnes.
About 10,000 tonnes increase of the total will come from Japan, Ohyama said.
Japan's demand for nickel is projected to rise 9.5 percent to 199,200 tonnes, while supply is forecast to climb 2.3 percent to 188,100 tonnes, resulting in a deficit of 11,100 tonnes.
Ohyama declined to comment on his outlook for the metal's prices. (Reporting by Yuka Obayashi; Editing by Muralikumar Anantharaman)