Nickel rises, heads for fifth monthly gain on dwindling stocks

Nickel rose in London, heading for a fifth straight monthly gain, on speculation that supply will remain tight after two mining projects were delayed.

Stockpiles of nickel tracked by the London Metal Exchange have plunged 81 percent in 2006 to 6,726 metric tons, equal to less than two days of global usage. BHP Billiton Ltd. said today that its Ravensthrope nickel mine will take up to a year longer to develop. Last week, Cia. Vale do Rio Doce said it will start up the Goro mine in 2008, a year later that previously planned.

"This will certainly keep prices high," Andrew Mitchell, a nickel analyst at Surrey, England-based metals consulting company Brook Hunt, said by telephone.

Nickel for delivery in three months on the LME gained $1,050, or 3.2 percent, to $33,750 a ton as of 1:31 p.m. local time. A close at the level would mean a 10 percent gain this month, following a 4.3 percent increase in October. A futures contract is an obligation to buy or sell a commodity at a fixed price for a specific delivery date.

Prices of the metal, mostly used in stainless steel, have more than doubled this year as demand from steelmakers expanded, forcing consumers to tap into stockpiles.

Ravensthrope is in Western Australia. Lower-than-expected labor productivity and late delivery of materials and equipment rope will increase costs by 64 percent to $2.2 billion and delay its start-up until the first quarter of 2008, Melbourne-based BHP said.

Goro, on the Pacific island of New Caledonia, is the largest nickel mine being built. The project has suffered from vandalism, local protests over environmental concerns and ballooning costs.

Brook Hunt's Mitchell said there will be a 5,000-ton supply shortfall this year. He will revise his market forecast for next year to show a shortfall, from a surplus previously. He also expects a larger deficit in 2008.

Copper for delivery in three months on the LME gained $35 to $7,045 a ton. The contract headed for a second straight monthly decline. On the Comex division of the New York Mercantile Exchange, the March contract added 2.75 cents to $3.181 a pound.

Among other LME-traded metals, aluminium rose $20 to $2,720 a ton and zinc increased $45 to $4,385. Lead was $20 higher at $1,660 a ton and tin climbed $220, or 2 percent, to $10,570.