The price of nickel rose to its highest level in a decade on Wednesday as investors bet automakers will have to struggle to secure supplies for their electric vehicle batteries as stocks run low.
Nickel was the leader among industrial metals, which also rose as concerns about economic growth in China, the world's largest consumer of metals, eased.
The London Metal Exchange's three-month nickel contract jumped 4.4% to $22,745 a tonne, the highest level since August 2011. By 1130 GMT, the price was down to $22,610, up $3.7.
"Nickel, the king of batteries, was the initial driver, breaking that $21,000 level with a gap higher, and now the rally is seeping into copper and beyond," said Ole Hansen, head of commodities strategy at Saxo Bank in Copenhagen.
"In China, the focus is shifting from fears of a slowdown in the real estate sector to growing signs that they are going to provide stimulus and support to the economy, some of which will benefit industrial metals."
In China, nickel prices surged to record highs as February contracts on the Shanghai Futures Exchange ended 3.8% higher in afternoon trading at 162,340 yuan ($25,510) a tonne.
Singapore trader said stocks are running low due in part to restocking by Chinese steel mills.
LME nickel stocks have halved over the past five months to 99,462 tons, the lowest level since December 2019, while SFE stocks of refined nickel were close to a record low of 4,455 tons hit in August 2021.
LME nickel available at $192/ton compared to a three-month contract, the highest since October 2019, indicating limited supplies nearby.
Analysts at Goldman Sachs forecast a 30,000 t nickel market deficit in 2022, compared to their August forecast of a 13,000 t deficit.