LONDON: Nickel prices rose on Thursday to their highest since 2014 as strong demand ate into stockpiles held in the London Metal Exchange (LME) warehouse system.
Other industrial metals also rose and aluminium reached a 13-year high on supply concerns.
Benchmark LME nickel was up 2.5% at $20,205 a tonne at 1605 GMT after touching $20,280, its highest since May 2014.
Nickel is used in stainless steel and in batteries that power electric vehicles, demand for which is expected to grow.
“The demand side is pretty robust (and) supply is tight because of earlier lockdowns, particularly in places like Indonesia,” said independent analyst Robin Bhar.
“We’ve seen LME and Shanghai stockpiles being drawn down as a result,” he added, predicting that nickel would rise above its 2014 peak of $21,625.
NICKEL STOCKS: Inventories in LME-registered warehouses have fallen to 181,368 tonnes from more than 260,000 tonnes in April.
Stocks in Shanghai Futures Exchange (ShFE) warehouses - at less than 6,000 tonnes - are down from about 30,000 tonnes a year ago.
SPREAD: The premium for cash nickel over three-month metal on the LME surged to a two-year high of $100 a tonne this month before easing to about $15. A premium suggests tight supply.
COLUMN: A Shanghai squeeze is revitalising the nickel market, writes Reuters columnist Andy Home.
CHINA: In top metals consumer China, factory gate inflation hit a 13-year high and a Reuters poll showed new yuan loans are likely to have rebounded in August.
ECB: The European Central Bank said it would reduce its stimulus slightly. The dollar also edged lower.
COAL: China’s benchmark metallurgical coal and coke futures surged to record highs.
ALUMINIUM: “We see the global aluminium market recording a deficit of around 750k tonnes in 2021,” said analysts at ANZ, predicting a more balanced market next year.
Benchmark LME aluminium was up 1.6% at $2,837.50 a tonne after touching $2,848, its highest since 2008.
OTHER METALS: Copper was up 1.6% at $9,393 a tonne, zinc rose 0.4% to $3,075.50, lead was 0.9% higher at $2,298 and tin rose 3.7% to $33,410.