A recent decline in crude steel output and an expected boost in Chinese demand this month, after the Lunar New Year holidays in February, have pushed prices higher, they said.
The metal is mainly used in stainless steel, but demand for battery grade nickel for electric vehicles is expected to boom in as the world moves towards a lower-carbon economy.
Benchmark three-month nickel edged up 1.5% to $16,379 a tonne in official trading but was still on track for a weekly loss of about 11%, its biggest since September 2011.
China announced on Monday weaker-than-expected February activity growth in the manufacturing sector, one of the biggest consumers of industrial metals.
A report that China's central bank will keep liquidity reasonably ample to support economic recovery also provided a positive background in Thursday's trading.
About 70 ships containing an estimated 6 million tonnes of Australian thermal and metallurgical coal were sitting off the coast of China waiting to unload, according to ANZ commodity strategists.
Zinc inventories in LME warehouses were last at 293,800 tonnes, down just 700 tonnes from the previous session where stockpiles hit their highest since June 2017 at 294,500 tonnes.
China reported its biggest daily jump in new COVID-19 cases in more than 10 months for Jan.13, underscoring the growing threat ahead of a major national holiday.