Nickel near peak in light LME trade

LONDON, Oct 12 (Reuters) - London nickel futures were trading about one percent below this week's record high on Thursday and analysts said the metal had potential to climb to new peaks in the near term on tight inventories. Other contracts on the London Metal Exchange (LME) were little changed, trading just below Wednesday's closing levels.

"Nickel is getting stronger...I think copper will recover as well and that would strengthen the whole complex," an analyst in London said.

Nickel for delivery in three months was at $29,900/30,000 a tonne in midsession dealing, compared with $30,100/30,150 on Wednesday. Earlier this week it hit a record high of $30,250.

Investors were betting that limited stocks of the metal, used to make stainless steel more malleable, would be insufficient to meet demand in the traditionally strong first quarter.

Stocks jumped 966 tonnes to 4,986 overnight to just over a day's global consumption, but with 2,334 tonnes of that earmarked for delivery, just 2,652 tonnes were available to support the 1.4 million tonne-per-year market.

Trade across the metals was low-key, dealers said, with many players still out of the office as the annual LME dinner week winds down.

"A lot of the market is missing, either in meetings or travelling back after the LME week," one said.

"There is a general lack of interest and investors seem quite happy to wait for next week, when volumes will pick up," he added.

Copper was at $7,430, against Wednesday's close at $7,515.

CHINA COPPER IMPORTS

In industry news, China imported 528,953 tonnes of scrap copper in September, 30 percent more than in August.

But Chinese imports of copper, including semi-finished products, fell 23.6 percent from a year earlier to 1.5 million tonnes in the first nine months of this year, data showed on Thursday [ID:nSHA45299].

Dealers said attention was shifting to low copper stocks, helping to support copper despite bearish expectations for Chinese refined copper demand growth this year.

"As we get to the end of this year and into next, we could see copper spike back up to $10,000 or $12,000. Stocks are low and there is always the chance we could see things rise sharply," the trader said.

The market hit a record $8,800 in May.

Aluminium was down $17 at $2,583.

Analysts noted increasing tightness in the market. A month ago three-month aluminium was trading at some $50 higher than the cash price.

On Thursday cash prices exceeded the three month price by $1.50.

In a well supplied market, futures prices typically are higher than nearby prices, reflecting interest, insurance and storage costs for metal, but when material is in short supply, buyers will pay more for cash metal in order to secure their needs.

"The nearby spreads are all beginning to tighten in anticipation of a squeeze around the 20 December 2006," Sempra Metals economist John Kemp said in a report.

"Most of the tightness is nearby. But dates throughout 2007 tightened slightly."

Lead was steady at $1,455, about $15 short of Wednesday's record, and tin jumped $225 at $9,300.

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