LONDON: Nickel prices hit their highest in nearly 10 years on Tuesday as dwindling global inventories pointed to solid demand while an outage at the London Metal Exchange (LME) hit trading.

The overnight outage at the world’s largest marketplace for industrial metals lasted five hours and hampered activity because some trades did not go through, traders said.

Prices for nickel on the Shanghai Futures Exchange (ShFE) moved higher while the LME’s electronic system was down, and the underlying price moved quickly to catch up with the move on ShFE, a trader said.

Prices for stainless steel, where most nickel supply is used, jumped as producers cut production to carry out maintenance. Output is also expected to be curbed by Spring Festival holidays and the Beijing Winter Olympics because industries have been asked to lower output during the Games.

Stainless steel mills, mostly in China, account for about two thirds of global nickel consumption.

At the same time, demand for nickel from a surge in electric vehicle sales has bouyed the market, with major car producers ramping up output and sales.

Benchmark three-month nickel on the LME was up 5% at $21,430 a tonne by 1720 GMT, its loftiest since touching $21,850 in February 2012.

INVENTORIES: On-warrant nickel stocks available to the market were at their lowest since December 2019 at 48,846 tonnes.

SPREADS: Worries over supply have pushed up the premium of LME cash nickel over the three-month contract to $130 a tonne from $47 a tonne in mid-December.

Nickel stocks in Shanghai Futures Exchange (ShFE) warehouses are close to record lows at 4,859 tonnes, down from about 16,000 tonnes a year ago.

OTHER METALS: LME copper rose 1.8% to $9,734 a tonne, aluminium gained 1.5% to $2,977, zinc added 2.2% to $3,554, lead was up 1.2% at $2,305 and tin advanced 2% to $40,700.