Nickel futures rose to a seven-month high in London as demand from stainless steel producers, the largest users of the metal, caused a shortage.
Prices for immediate delivery traded $1,000 higher than the three-month price, the largest gap since 1989, according to Standard Bank London. In a market with adequate supply, forward prices exceed nearby prices due to storage and interest costs.
“There won’t be much new production until 2007 and stainless steel production is increasing very quickly in China,” Philip Joly, the spokesman of Eramet SLN, said by phone from Paris. Eramet is the world’s largest producer of ferronickel.
Nickel for delivery in three months on the London Metal Exchange rose as much as 2.8 percent today to a seven-month high