Dec. 5 (Bloomberg) -- Nickel advanced to the highest level since at least 1987 as dwindling supply created a shortfall of the metal used in stainless-steel production. Lead rose to a record and aluminum advanced to a six-month high.
Nickel stockpiles monitored by the London Metal Exchange gained 2 percent to 6,336 metric tons, according to the exchange's daily report. Still inventory has plunged 82 percent this year and stayed below two days of global consumption.
``The prospects of tighter markets will underpin still-high prices in this period,'' Robin Bhar, a London-based analyst at UBS Ltd., wrote in a report today. Bhar has followed metals since 1984.
Nickel for delivery in three months gained $700, or 2.1 percent, to $34,400 a ton as of 1:03 p.m. local time. Earlier, it rose to $34,500 a ton, beating a previous high set on Dec. 1 by $200.
Prices have more than doubled this year as Chinese stainless- steel makers expanded production capacity. Goldman Sachs Group Inc., the most profitable investment bank in Wall Street history, forecast prices for immediate delivery will average $25,000 next year, 33 percent more than its previous estimate. The global supply shortfall will be 20,000 tons this year, the bank said in a Dec. 1 report.
Two of the largest nickel-mine developments have been delayed, prolonging the supply shortfall. BHP Billiton Ltd. said last week that its Ravensthorpe nickel mine will take up to a year longer to develop. Cia. Vale do Rio Doce said in November that it will start up the Goro mine in New Caledonia in 2008, a year later that previously planned.
Aluminum, Lead
Aluminum gained after data showed demand has increased, renewing speculation that supply may lag behind demand this year.
The amount of metal bought and due for delivery, known as canceled warrants, of the inventory tracked by the London Metal Exchange jumped 96 percent to 50,050 metric tons from the previous day, the exchange said in a report, indicating more demand.
Aluminum for delivery in three months on the LME gained as much as 1.4 percent to $2,850 a ton. A close at the level would be the highest since May 23. The contract traded at a record $3,310 on May 11.
Consumption will exceed supplies, creating a shortfall of 300,000 tons in the global market this year, according to Beijing Antaike Information Development Co.
LME stockpile data indicate a supply squeeze of the metal. Between 50 percent and 79 percent of LME-monitored aluminum inventory belongs to one investor or a group of investors, the exchange's latest data as of Dec. 1 show. More traders are betting prices will rise to $3,000 a ton tomorrow, according to options data.
There are 9,612 bets, more than a quarter of total bets on aluminum gains, that prices will rise to $3,000 a ton tomorrow, when holders have to exercise their LME options for the expiring December contract. Options grant holders a right to buy or sell a commodity at a specific price.
Lead gained as much as $17, or 1 percent, to $1,756 a ton, the highest ever. That beats the previous record set on Nov. 8 by $1.
Among other metals traded on the LME, copper rose $90, or 1.3 percent, to $7,090 a ton and zinc added $80 to $4,525. Tin was unchanged at $10,675 a ton.
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