Nickel notched up a fresh high for the third straight session on Monday on the London Metal Exchange as low visible stocks and supply glitches stoked speculator interest.
"The supply and demand fundamentals are still very tight - especially stockpiles against usage ratios everywhere in the world," an analyst at a commodities investment fund said.
Nickel prices peaked at $34,100 a tonne earlier, retreating to $33,500 a tonne at the close, just above Friday's late indicated level of $33,450/33,500.
LME stocks of the metal used mainly to make stainless steel rose on Monday by 588 tonnes to 6,942 - but nearly 30 percent of that total was unavailable to the market.
"Nickel broke resistance at $32,500 (on Thursday) and now may try to test the $35,000 level next," analyst Edward Meir at Man Financial said in a report.
Roy Carson of LME brokers Triland Metals noted steady consumer demand in his weekly report, but said it was far from the heated level when nickel was hitting highs a few weeks ago. "The suspicion has to be that this new upward break would appear to be a primarily a technical affair," he said.
Nickel has risen by almost 150 percent since the start of year, boosted by predictions of tight global supply and strong demand, particularly from the Chinese stainless steel industry.
Production at Inco's big Goro nickel project, expected to produce 60,000 tonnes at full capacity, in the French overseas territory of New Caledonia is now expected to start later than scheduled, at the end of 2008.
Also in New Caledonia, France's Eramet nickel is still operating below capacity due to a strike. "The very tight supply situation is unlikely to ease," a Dresdner Kleinwort said in a report.
Copper closed at $7,095 versus $7,150. Copper has been under pressure recently on rising LME inventories, up by some 40 percent since mid-October, and Chinese de-stocking.
"Chinese copper demand was really missing this year... but now it seems to be picking up," Michael Widmer at Calyon said. Widmer said Chinese customs trade data in October showed copper imports and apparent consumption rising by 0.5 percent year-on-year and 9.7 percent year-on-year, respectively, following continuous declines in the past few months.
"We expect that demand and imports are set to recover further during the next few months, which may also mean that prices should find more support from Chinese buyers going forward," Widmer said in a report.
The market was eyeing supply disruptions, with India's Hindalco Industries temporarily suspending operations at one of its smelters due to a shortage of copper concentrate. Annual capacity of the smelter is 70,000 tonnes.
Barclays Capital said in a report that the closure was a sign that the process of global concentrate destocking, which has fed metal production, may no longer be sustainable. "Further smelter production cuts or closures of this nature would be extremely bullish for metal prices," the report said.
Zinc for delivery in three months matched a record high at $4,580, before falling to $4,470, down 0.9 percent and aluminium ended down $20 at $2,700.
Total stocks of aluminium at Western world smelters excluding finished end-products fell to 2.876 million tonnes at the end of October 2006, provisional International Aluminium Institute (IAI) figures showed. Lead gained $8 to $1,580 and tin was untraded, indicated at up at $10,150/10,175 from $10,045/10,050.