LONDON: Nickel prices touched their highest in more than seven years on Tuesday as global inventories pointed to solid demand while an outage at the London Metal Exchange (LME) hit trading.
The overnight outage at the world's largest marketplace for industrial metals lasted five hours and hampered activity because some trades did not go through, traders said.
"The outage from the LME last night certainly played a part and we expect some shorts were stopped out overnight," said Sucden Financial's head of research, Geordie Wilkes.
Prices for stainless steel, where most nickel supply is used, jumped as producers cut production to carry out maintenance. Output is also expected to be curbed by Spring Festival holidays and the Beijing Winter Olympics because industries have been asked to lower output during the Games.
Stainless steel mills, mostly in China, account for about two thirds of global nickel consumption.
At the same time, demand for nickel from a surge in electric vehicle sales has bouyed the market, with major car producers ramping up output and sales.
Benchmark three-month nickel on the LME was up 3.3% at $21,475 a tonne in official trading, its loftiest since May 2014.
Dollar: A weaker US currency has also boosted dollar-priced commodities, making them more attractive to holders of other currencies.
Inventories: On-warrant nickel stocks available to the market were at their lowest since December 2019 at 48,846 tonnes.
Spreads: Worries over supply have pushed up the premium of LME cash nickel over the three-month contract to $130 a tonne from $47 a tonne in mid-December.
Nickel stocks in Shanghai Futures Exchange (ShFE) warehouses are close to record lows at 4,859 tonnes, down from about 16,000 tonnes a year ago.
Other Metals: LME copper rose 0.7% to $9,631 a tonne, aluminium gained 1% to $2,960, zinc added 1.1% to $3,515, lead was up 0.6% at $2,289.50 and tin advanced 1.1% to $40,350.