LONDON - Nickel prices surged to their highest in a decade on Wednesday as investors bet automakers will have to scramble to secure supplies for their electric vehicle batteries as inventories dwindle.
Nickel was the top performer among industrial metals, which also rallied as worries eased about economic growth in top metals consumer China.
Three-month nickel on the London Metal Exchange jumped as much as 4.4% to $22 745/t, the highest since August 2011. It had pared gains to $22 610 by 11:30 GMT, up 3.7%.
"The battery king nickel has been the initial driver, breaking above that $21 000 level, gapping higher, and now the rally is filtering through to copper and the others," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
"The focus in China is moving away from worries about the property sector slowdown to increased signs that they are going to provide stimulus and support to the economy, some of which will benefit industrial metals."
In China, nickel prices leapt to a record high, with the February contract on the Shanghai Futures Exchange ending daytime trading 3.8% higher at 162 340 yuan ($25 510) a tonne.
A Singapore-based trader said that inventories were running low partly due to restocking by Chinese stainless steel mills.