March 10 (Bloomberg) -- Jinchuan Group Co., China’s biggest nickel producer, said the nation’s State Reserve Bureau is unlikely to buy the metal for its stockpiles now.

“Looking at the current situation, the government is unlikely to buy nickel,” Chairman Yang Zhiqiang said in Beijing, while attending the National’s People Congress. Yang didn’t elaborate.

China has bought aluminum, zinc, corn and cotton to support domestic producers as prices dropped, spurring speculation it could also buy nickel. Nickel futures have dropped 18 percent this year in London as demand from stainless steelmakers plunged.

“Demand from stainless steelmakers isn’t very good and the demand for the metal isn’t sufficient,” Yang said in an interview. “At current prices, we have a little profit.”

Chinese consumption of refined nickel will probably drop from the 300,000 metric tons last year, though “it won’t fall by a big margin,” Yang said, without giving a specific forecast.

Baoshan Iron & Steel Co., China’s second-largest stainless steel producer, raised output for the first quarter, from the previous three months as demand gained and plant maintenance was completed, the company said last month.

China accounts for about 25 percent of global nickel demand, according to Ningbo Sunhu Chemical Products Co., the country’s largest nickel trader.

Reuters last month had reported China may buy 10,000 to 20,000 metric tons of the metal for its reserves. The China Nonferrous Metal Industry Association had said the country had “no such plan.”

To contact the reporter on this story: Yu Xiao in Beijing at yxiao@bloomberg.net

Last Updated: March 10, 2009 04:21 EDT