Nickel rises on weak supply buzz

Nickel gained in London on speculation that an increase in stockpiles will be insufficient to satisfy growing demand for the metal used in stainless steel.

Inventories monitored by the London Metal Exchange gained for a second consecutive session, rising 2 per cent to 3,948 metric tonne, the LME said today in a daily report. That's enough for less than two days of global consumption.

"The metal is in a tight supply situation,'' Andrew Harrington, a commodities analyst at Australia & New Zealand Banking Group Ltd., said in an interview from Sydney. The stockpile increases came from "a very low base,'' he said.

Nickel for delivery in three months on the LME gained $650, or 1.5 per cent, to $43,050 a ton as of 9:35 am in London. The metal traded at a record $43,261 on March 8.Prices may rise to $50,000 a tonne this year, said analysts and investors including Martin Siegel, a fund manager at PEH Wertpapier AG, who invests about 30 per cent of his $39 million fund in nickel-related stocks.

Copper gained $54.50, or 0.9 per cent, to $6,184.50 a tonne. Copper stockpiles dropped 0.8 per cent to 201,025 tonne, the lowest since January 24.

Also on the LME, aluminum rose $7 to $2,725 a tonne, lead gained $48 or $1,820 and zinc added $25 to $3,285. Tin increased $125 to $13,775.