LONDON: Nickel prices charged to a new one-year peak on Thursday as more speculators piled in, prompting jitters among some investors that the rally had entered bubble territory.
Nickel - used to make stainless steel and batteries for electric vehicles - has surged by nearly a quarter since July 2 on the London Metal Exchange, fuelled by demand from a combination of industrial buyers and speculators, traders say.
Shanghai nickel prices rose the maximum 6% on Thursday, extending their rally into a ninth day.
"It's overbought, but the trend is clearly up," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan. "I know that lots of players are hedging by buying puts in the market, that's the smart thing to do."
Xu Aidong, chief nickel analyst at research house Antaike, said nickel's run was spurred by a 10% jump in China's stainless steel output in the first half of the year.
A looming ban on Indonesian nickel ore exports is still affecting prices even though it will not come into force until 2022, Xu added.
LME benchmark nickel failed to trade in official open outcry activity and was bid up 2% at $14,725 a tonne after touching $14,910, the strongest since July 2 last year.
Nickel volume was 9,580 lots, more than the levels for copper and aluminium combined, which are usually the heaviest traded metals.
* SHANGHAI NICKEL: The most traded August nickel contract on the Shanghai Futures Exchange rose to the highest since June 29, 2018.
Market open interest in Shanghai nickel, a measure of liquidity, increased to the highest since April, and was up more than 50% since July 5.
The trading volume for the most active contract on Thursday was around 1.26 million lots, almost double the 30-day average.
* NICKEL STOCKS/SPREADS: LME nickel inventories have slid by 43% over the past 12 months to the weakest since January 2013.
The discount of cash LME nickel to the three month contract more than halved to $31 a tonne by Wednesday's close from $66 a day earlier, indicating tighter availability of near-term supplies
* COLUMN: Nickel jumps, but fear of Indonesia export ban is unfounded: Andy Home
* TC/RCs: China's top copper smelters on Thursday lowered their floor treatment and refining charges for the third quarter by 24.7%, two people familiar with the matter said, with one adding smelters will consider cutting output if low rates persist.
* PRICES: LME copper was bid down 0.4% at $5,955 a tonne in official rings after US-China trade war concerns returned and aluminium was bid down 0.2% at $1,844.
Zinc gained 0.1% to trade at $2,478 in official activity after hitting $2,504, the highest since July 1, lead was bid up 0.6% to a three-month high of $2,018 and tin fell 0.5% to trade at $17,830.