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* Nickel demand to exceed supply for third straight year -Antaike
* Says EV battery sector setting nickel on a "new journey"
* Expects nickel price to average $11,500 a tonne in 2018
GUANGZHOU, China, Nov 8 (Reuters) - Demand for nickel will outstrip global supply for the third year on the trot in 2018, although the size of the deficit is set to shrink, according to Chinese state-backed research firm Antaike.
Appetite for nickel has been driven up as battery makers increasingly turn to the base metal to help power global electric car sales.
The global deficit in nickel supply will drop to 53,000 tonnes in 2018 from 98,000 tonnes this year, partly due to a recovery in Chinese production growth, Antaike nickel analyst Xu Aidong said in a presentation on Tuesday at an industry conference in southern China.
She added that worldwide nickel consumption would climb 5.5 percent to 2.15 million tonnes in 2017 from 2016, with output seen rising only 3 percent to 2.052 million tonnes.
Meanwhile, Chinese nickel production is seen falling by 2 percent this year to 590,000 tonnes, although Xu said this would be offset by increased output in Indonesia, where Chinese companies have invested in projects in line with China's Belt and Road trade initiative.
As a result of this investment, Indonesian primary nickel output will more than double to 190,000 tonnes in 2017 from 90,000 tonnes last year, Xu said.
The more balanced global market should see benchmark global nickel prices, currently trading around $12,600 a tonne, averaging $11,500 next year, according to Antaike.
China's primary nickel consumption will rise by 3.8 percent year-on-year to 1.13 million tonnes in 2017 and then to 1.18 million tonnes in 2018, according to the research group.
"The dominating force (in global consumption) in the nickel market will still be stainless steel," Xu said, although she predicted that stainless steel's share of nickel consumption would drop to 62 percent by 2025 from 68 percent in 2015. Nickel can be used to help churn out stainless steel.
The share of the battery sector, which is putting nickel on a "new journey" given the growing popularity of electric vehicles, will increase to 9 percent from 2.6 percent, she said.
Total nickel consumption in the Chinese battery sector will reach 49,000 tonnes this year, Xu said. That includes 11,000 tonnes in power cells for EVs, a figure Antaike sees rising to 45,000 tonnes by 2020 and 150,000 tonnes in 2025. (Reporting by Tom Daly; Editing by Joseph Radford)