* Nornickel's 2016 EBITDA of $3.9 bln beats forecast
* Sees global nickel market deficit widening in 2017
* Sees 2017 capex at $2 billion (Adds details, quotes, context)
MOSCOW, March 15 (Reuters) - Russia's Norilsk Nickel reported a 9 percent drop in 2016 core earnings on Wednesday due to lower metals prices, but was cautiously optimistic about the nickel market for this year, saying a shortfall in supply could increase.
Nornickel, the world's second-largest nickel producer after Brazilian miner Vale SA and the world's top palladium producer, has also been affected by a one-off fall in production due to a revamp of its downstream operations.
"The last year marked as very challenging for the commodity industry as many metal prices touched their multi-year lows, while further exhibiting extreme volatility alongside exchange rates," Chief Executive Vladimir Potanin said in a statement.
Lower metal prices saw 2016 earnings before interest, taxation, depreciation and amortisation (EBITDA) fall to $3.9 billion, although that beat analysts' average estimate of $3.7 billion in a Reuters poll.
Potanin said he expected Nornickel's dividend for 2016 to be around 60 percent of EBITDA. The company has already paid a 9-month dividend of $1.2 billion.
Norilsk, part-owned by Potanin and aluminium producer Rusal , said its 2016 net profit rose 47 percent to $2.5 billion mainly due to the appreciation of the rouble currency, while revenue fell 3 percent to $8.3 billion.
For this year, the company sees the deficit in the global nickel market widening to 100,000 tonnes from 10,000 tonnes in 2016, although uncertainties include whether Indonesia resumes exports of unprocessed ore and whether demand from China softens.
Nornickel said it expected the deficit in the palladium market to widen to 1 million troy ounces from 310,000 ounces in 2016 due to industrial demand growth and stable supply.
The miner forecast its capital expenditure would rise to $2 billion in 2017 from $1.7 billion in 2016.
Its shares were up 0.5 percent in Moscow, compared with a 0.3 percent fall in the broader MICEX index. (Reporting by Polina Devitt; Editing by Alexander Winning and Mark Potter)