Nickel jumped 6 percent in Shanghai on Wednesday, leading a rebound in Chinese base metals, amid talk that producers may trim output as prices hit multi-year lows this week. Other Shanghai metals also rebounded. January copper rose 3.1 percent to 34,620 yuan a tonne and zinc climbed 2.6 percent to 12,815 yuan per tonne. Lead rose 2.5 percent to 12,565 yuan.
Investors also covered short positions after a near 6 percent rally in London on Tuesday, which was the biggest single-day gain for prices since 2012.
Chinese nickel producers will meet on Friday to discuss the market situation and potential production cuts after prices fell this week to the lowest in more than a decade, industry sources said on Wednesday.
China's major zinc smelters said last week that they will slash output by 500,000 tonnes next year, almost a fifth of their output as the industry tries to boost prices.
"People were so bearish about the market they kept on selling. But once they saw London prices recover, we also saw an increase in Shanghai," said Peter Peng, analyst at CRU Group in Beijing, said on nickel's surge.
The most-traded nickel for January delivery on the Shanghai Futures Exchange closed up 6 percent to hit its exchange-set limit of 68,250 yuan ($10,684.60) a tonne.
Production cuts announced by Chinese zinc smelters last week will do little to tighten next year's global supply-demand balance in refined metal because already-known mining cutbacks would have forced smelters to reduce production anyway.
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