LONDON: Nickel prices on the London Metal Exchange (LME) jumped more than 6% on Tuesday to their highest in more than three weeks on expectations that a large short position maturing in January would have to be bought back, metal traders said.

Three-month nickel hit $31,975 a tonne, its highest since Dec. 8, before falling back to $31,675 at 1334 GMT.

LME data gathered daily and published with a one-day lag shows one company holds 20-29% of open interest – the number of outstanding contracts due to mature or be rolled over in January.

“There is a potential event brewing once more in the nickel market as the futures open position in January is around 13,000 lots (23,400 tonnes) with one short holding 30% of the position,” Kingdom Futures Chief Executive Malcolm Freeman said in a recent note.

Freeman was referring to the doubling of nickel prices in March to a record high above $100,000 a tonne in a disorderly market, prompting the LME to suspend nickel trading for more than a week.

The exchange also cancelled all nickel trades on March 8, for which it is being sued.