LONDON, July 16 (Reuters) - Nickel prices surged to their highest in 11 months on Tuesday, propelled by buying from speculators and industrial consumers worried about potential future shortages.

A key ingredient in batteries for electric vehicles (EVs), nickel could be subject to increasingly heavy demand with an expected shift from diesel and petrol cars in the coming years.

“We’ve been hearing about consistent strong Western consumer buying as the main driver of the price, probably related to EV nickel hedging requirements,” said Nicholas Snowdon, metals analyst at Deutsche Bank in London.

Current estimates peg the future supply situation as less critical than forecasts from a year ago, but industrial buyers remain nervous about availability, Snowden said.

“The balance has softened from a sizeable deficit to close to balance,” he said. “But it’s not a sudden swing back to significant surplus and ample availability, so I think there’s still a concern over making sure that you have enough raw materials.”

As nickel prices ramped up, buying from speculators extended the rally, one broker said. “It’s CTA (commodity trading advisers) momentum buying ... that is pushing things (nickel) higher.”

CTA funds often base trading decisions on chart patterns and technical levels, including momentum.

Benchmark three-month nickel on the London Metal Exchange (LME) climbed as much as 2.7% to $14,025 a tonne, its highest since last August, and traded 2.3% higher at $13,980 in official open outcry activity.

Prices of nickel, mainly used in the stainless steel industry, have also been boosted by worries of restricted ore supplies from major producer Indonesia because of a planned 2022 export ban.

LME nickel has been the best-performing base metal this year with gains of 31% while most other base metals have fallen.

Click here to continue reading...

Subscribe to the RSD email list and get the latest resource stock activity directly to your inbox, for free.

Part of the Stock Digest family of websites

Small Cap Stock Digest



Name Last Change
DOW 27867.50 0.05%
S&P 500 3138.61 0.19%
NASDAQ 8646.01 0.34%
TSX 16929.51 0.13%
TSX-V 535.07 0.00%

Resource Commodities

Name Last Change
Gold 1472.93 0.63%
Silver 16.84 1.07%
Copper 2.76 2.756
Platinum 901.00 0.67%
Oil 59.24 0.37%
Natural Gas 2.26 1.41%
Uranium 25.80 0.00%