Posco, the world's fourth-largest steel maker, will raise output of a nickel-free stainless steel fivefold next year as the price of nickel has hit a record.

Posco plans to sell 10,000 tonnes a month of the steel, which it introduced this month, from 2,000 this year, the Pohang-based firm said yesterday. The steel, which uses chromium instead of nickel, is the equivalent of US$2,470 a tonne, half the price of so-called 300-series cold-rolled coil steel.

Posco has raised stainless steel prices four times this year because of the cost of nickel.

While Posco's product is not the first of its kind and may be similar to products in U.S. markets, it does represent the acceleration in substitution by consumers, said Alan Heap, Citigroup analyst.

"It's a trend towards low and no nickel content alloys and away from austenitic nickel steel that's being driven by high nickel prices and short availability."

Citigroup expects substitution will likely slow nickel consumption growth in 2007 to 7.5%, from 10.5% in 2006. However, it still expects a supply deficit of 9,000 tons.