LONDON: Low inventories propelled prices for nickel to 11-1/2 year highs on Thursday, with future demand expected to rocket thanks to higher electric vehicle battery consumption.
Benchmark three-month nickel on the London Metal Exchange (LME) climbed 1.1% to $23,375 per tonne, its highest since August 2011.
The most-traded February nickel contract on the Shanghai Futures Exchange hit a record high of 176,280 yuan ($27,796.52) a tonne.
"The nickel price rally is likely to have been boosted by robust demand prospects and supply concerns," said Commerzbank analyst Daniel Briesemann.
Nickel, the majority of which goes into stainless steel, is betting on higher demand from its use in batteries that power electric vehicles due to its high energy density properties.
Inventories: Nickel stocks in LME-registered warehouses were at their lowest since 2019 at 94,830 tonnes compared to 264,606 tonnes in April 2021.
In ShFE-monitored warehouses, stocks were near record lows touched in August at 4,711 tonnes.
Spreads: The premium of the LME cash contract over the three month contract eased to $233 a tonne, down from $495 on Monday which was its highest in nearly 13 years.
Outlook: Goldman Sachs sees a wider deficit for nickel this year than previous estimates. The bank now expects nickel to be in a 30,000-tonne deficit compared to an August estimate of 13,000 tonnes.
Russia: The European Union and the United States threatened sanctions if Moscow attacks Ukraine. Traders said the potential for this sparked supply concerns as Russia is a major producer of nickel, aluminium and palladium.
Sanctions would "further exacerbate supply shortages at a time when the European consumer has been evident on every single price dip, said Alastair Munro at broker Marex, talking about aluminium.
Stainless Steel: Stainless steel futures were boosted to a three-month high by the rise in nickel prices.
China Stimulus: Sentiment in the industrial metals sector was also buoyed by monetary easing efforts in top metals consumer China to prop up a slowing economy with markets expecting more stimulus.
Aluminium Supply: Global primary aluminium output fell 1.25% year on year in December to 5.622 million tonnes, data from the International Aluminium Institute showed.
Other Metals: LME copper rose 0.8% to $9,920 a tonne, aluminium gained 0.7% to $3,071, zinc added 1.6% to $3,639 and lead eased 0.1% to $2,360.
Tin was up 1.4% to $43,480 after touching a record of $44,180