nickel rises to 19 year high...

Source: www.bloomberg.com

Nickel Rises to 19-Year High, Stockpiles Fall to 2-Month Low - By Chia-Peck Wong

Oct. 9 (Bloomberg) -- Nickel prices rose to their highest in at least 19 years on the London Metal Exchange amid concern supply won't meet demand after inventories dropped to the lowest in more than two months.

Stockpiles of nickel, a metal used to enhance the anti- corrosiveness of stainless steel, fell 8.2 percent to 4,458 metric tons, the exchange said today in a daily report, the lowest since July 31. That is also the biggest daily drop since Sept. 27.

``There's simply no material around and consumption is still good,'' said Juan Pablo Orjuela, a London-based analyst at Koch Metals Trading Ltd., which trades on the exchange. ``For the foreseeable future, stockpiles are going down.''

Nickel for delivery in three months rose as much as $750, or 2.5 percent, to $30,250 a ton, the highest since at least 1987. It was at $30,175 at 9:56 a.m. local time. Inventories have slumped 88 percent this year, leading to a more than doubling of prices.

The jump in nickel prices hasn't deterred stainless-steel producers, which account for two-thirds of demand for the base metal, the International Nickel Study Group said Oct. 6. Demand will jump 10 percent this year to 1.37 million tons, compared with 1.24 million tons last year, the Lisbon-based industry group said. It will rise to 1.45 million tons next year.

``Stainless-steel production improved in the beginning of 2006 and has remained at record-high levels,'' the group said. Nickel usage fell last year as stainless-steel producers used less of the metal in their products, the group said.

Among other metals, copper for three-month delivery rose for the third straight day, by as much as $110, or 1.5 percent, to a one-week high of $7,570 a ton. It traded at $7,555 at 9:51 a.m. London time.

Aluminum for three-month delivery climbed $52, or 2 percent, to $2,642 a ton. Zinc gained as much as $150, or 4.2 percent, to $3,740 a ton, the highest since May 31. It traded at $3,700 a ton at 9:53 a.m. London time.

To contact the reporter on this story: Chia-Peck Wong in London at [email protected]

Last Updated: October 9, 2006 05:04 EDT