May 16 (Bloomberg) -- Inco Ltd., the world's second-largest nickel producer, expects Chinese demand for stainless steel to double in five years as the nation's economic growth brings more prosperity and demand for products containing the metal.

``China's growth is transforming the world economy,'' and will help sustain rising demand for nickel and other metals, Peter Jones, president of Toronto-based Inco, said today during a presentation to investors in New York. ``The fact is that 1.3 billion people want a better life, and that means higher nickel consumption.''

Chinese demand for nickel, the metal used to harden stainless steel, rose more than 75 percent in the first quarter from a year earlier, Jones said. Stainless steel demand in the Asian nation is expected to rise 800,000 metric tons above the 4.5 million tons sought last year, Inco estimates.

Demand will only increase as more Chinese gain affluence and greater spending power, Jones said. Some 300 million Chinese now earn more than $2,000 a year, a level that has historically accelerated stainless steel demand in other nations, he said.

``China could be consuming 10 million tons of stainless steel per year by 2010,'' Jones said.

China's growth in stainless-steel consumption is similar to Japan between 1960 and 1974, when global demand for the metal jumped 7 percent, Jones said. If China follows the same path as Japan, nickel demand growth may top 17 percent for the next 11 years, well above the long-term trend, he said.

World nickel supply is forecast to be 1.3 million tons this year, 16,000 tons short of global demand, Inco estimates. Global stainless-steel production is forecast to be 25,022 tons, up nearly 6 percent from a year ago.

Shares of Inco rose 20 cents to C$43.50 at 4:05 p.m. in Toronto Stock Exchange trading. The stock is up 7.9 percent in the past year.

Nickel prices have jumped 53 percent in the past year to $16,150 a metric ton today, reaching a high of $17,200 a metric ton in October.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net

Last Updated: May 16, 2005 16:10 EDT