The nickel market is facing its biggest squeeze in more than a decade as buyers are forced to pay huge premiums for immediate supplies with exchange inventories plunging.

Cash contracts on the London Metal Exchange reached a $90-a-ton premium to those expiring a day later, the highest since 2010 and nearing levels seen in 2007 during a historic squeeze. It’s more evidence of acute supply stress in metals, following turmoil in copper and tin markets last year.

Nickel inventories tracked by the LME, the most important base metals bourse, have slid to the lowest since 2019. They’ve also fallen on the Shanghai Futures Exchange, leaving buyers exposed to a simultaneous squeeze in onshore and international markets. That’s keeping prices near the highest since 2011.

The surge in premiums for near-term supplies has come to a head as traders and industrial consumers rush to buy back short positions in monthly contracts that are coming due on Wednesday. Stronger demand for nickel in electric-vehicle batteries and fresh worries about supply from Indonesia have caught many in the market off guard.

“The Shanghai tightness has fed through to London now, with low stocks on both exchanges and no signs of deliveries yet,” Marex analyst Alastair Munro said by email. “Essentially, traders and consumers have been caught short, with recent data pointing to a pick-up in EV sales.”

Nickel was little changed at $22 090 a ton by 9:59 a.m. on the LME, after earlier rallying back toward a peak set last week. In other metals, tin jumped as much as 2.3% to touch a fresh record high amid a chronic shortage that’s been exacerbated by global logistics snarl-ups.

Metals could find support after economists forecast that China’s cut of two key policy interest rates has opened the door to more monetary easing actions ahead. That’s happening as the country’s economy is being tested by outbreaks of the omicron virus strain, a decelerating property sector and sluggish consumer sentiment.

Macroeconomic sentiment has started to improve as China’s rate cut exceeded market expectations, Citic Futures said, adding that nickel is getting strong support from stockpile draw-downs.