nickel rises

Nickel Rises to a 19-Year High in London as Inventory Plunges

By Chanyaporn Chanjaroen

Dec. 1 (Bloomberg) -- Nickel advanced to a 19-year high in London as inventory of the metal used in stainless steel dropped the most in seven weeks.

Stockpiles of nickel tracked by the London Metal Exchange fell 9.8 percent to 6,066 tons, the exchange said today. That's the largest one-day decline since Oct. 13. Supplies may not meet demand before the ``end'' of the decade, said Xstrata Plc, which bought Canadian nickel producer Falconbridge Ltd. in September.

``The challenge of nickel is, how much of this is already in the current price?'' said Jon Bergtheil, head of global metals strategy at JPMorgan Securities Ltd. in London.

Nickel for delivery in three months on the LME gained $264, or 0.8 percent, to $34,214 a ton as of 12:20 p.m. in London, after earlier gaining as much as $350, or 1 percent, to $34,300, the highest since at least 1987. That beats the previous high set on Nov. 27 by $200.

Nickel has more than doubled this year, driven by expanding demand from China and a lack of new production capacity, David Rae, vice president of sales and marketing at Zug, Switzerland- based Xstrata's nickel unit, said in a presentation yesterday. He expects a supply shortage to continue through this decade.

``Under such conditions the nickel price can be expected to remain well above long-term averages,'' Rae said. Nickel has averaged $8,228 a ton since 1987.