Nickel prices hit new high

Nickel rose to a record for a fourth consecutive day in London, as stockpiles of the metal used in stainless steel plunged, increasing speculation that supply won't meet demand. Copper and aluminum also advanced.

Inventories monitored by the London Metal Exchange fell 5.8 per cent to 3,594 tonne, the exchange said in a daily report.

That's less than two days of global consumption. Stockpiles have slumped 45 per cent this year on surging Chinese demand for stainless steel.

"Supply has just not caught up with demand, particularly for stainless steel in Asia, and there is little prospect of that changing in the near future,'' Kevin Norrish, an analyst with Barclays Capital in London, said today by phone.

Nickel for delivery in three months on the LME gained $1,300, or 2.9 per cent, to $46,100 a tonne as of 9:40 am in London. That beat yesterday's record by $1,100.

The metal has jumped more than six-fold in the past five years, as supply failed to keep up with demand. China last year overtook Japan as the world's largest producer of stainless steel. China's stainless steel production soared 68 per cent last year, the Xinhua News Agency reported last month.

Copper gained $180, or 3 per cent, to $6,410 a tonne after stockpiles fell for fifth consecutive day. The LME-monitored inventories dropped 0.8 per cent to 196,125 tonne, the lowest since January 23.

Aluminum rose $35 to $2,750 a tonne, lead gained $45 or $1,920, zinc advanced $85 to $3,305 and tin jumped $225 to $13,725.