Nickel eyes $30,000/T on demand, limited supply

LONDON, Aug 15 (Reuters) Nickel flirted with record highs in London on Tuesday and was seen hitting ,000 a tonne, supported by a global shortage and strong demand dealers said.

Nickel for delivery in three months on the London Metal Exchange was ,200 a tonne at 1008 GMT, from ,100 at Monday's close and a record high of ,325 in Asia according to Reuters data.

The doubling in nickel prices since the start of the year was sparked by an unanticipated rise in stainless-steel demand coupled with miners' failure to ramp up production fast enough.

"People are expecting nickel to hit ,000. They buy early in the day in anticipation and sell in the afternoon," a dealer said.

"The game is still being played out. Some of the strength in nickel may also be to do with events in equities markets." Swiss-based Xstrata Plc said it had effectively taken control of Canadian miner Falconbridge Ltd., as it extended its all-cash bid expiry date to give it more time to obtain remaining shares.

The bid makes Xstrata the world's fifth-biggest diversified mining company by market capitalisation and boosts its copper and nickel portfolio. Xstrata said it now owned 92.1 percent of Falconbridge's shares.

On Monday, POSCO, one of the world's largest steelmakers denied reports it had made significant bets that prices would fall, but dealers said stainless mills may have to turn down orders if they cannot find more nickel.

"Demand has bounced far more than anyone anticipated, and nickel producers have been unable to respond. What looked a few months ago to be a modest surplus, has evaporated and the price should go up," SGCIB analyst Stephen Briggs said.

Stocks of nickel in LME-monitored warehouses fell 132 tonnes overnight to 5,808, of which over 3,600 tonnes are already earmarked for delivery. Daily world nickel consumption is around 3,500 tonnes.

Compounding the supply squeeze is a strike at Inco Ltd., 54,000-tonne-per-year Voisey's Bay nickel mine in Canada.

Copper rallied at ,730, as a strike at the world's largest copper mine, BHP Billion's Escondida mine in Chile, entered its second week.

The mine was running at between 40 and 60 percent of its full capacity a company spokeswoman said.

At full throttle, the mine accounts for 8 percent of global copper production and 20 percent of Chilean output.

"The strike continues at Escondida. The price ran up ahead of the strike, but there hasn't been any follow through, despite lasting longer than many had anticipated," Sempra Metals economist John Kemp said.

"This suggests that the market believes there is sufficient material around to meet needs or that the market believes that the strike won't last much longer. Both these are plausible assumptions but they are still assumptions." Aluminium gained to LONDON, Aug 15 (Reuters) Nickel flirted with record highs in London on Tuesday and was seen hitting $30,000 a tonne, supported by a global shortage and strong demand dealers said.

Nickel for delivery in three months on the London Metal Exchange was $27,200 a tonne at 1008 GMT, from $27,100 at Monday's close and a record high of $27,325 in Asia according to Reuters data.

The doubling in nickel prices since the start of the year was sparked by an unanticipated rise in stainless-steel demand coupled with miners' failure to ramp up production fast enough.

"People are expecting nickel to hit $30,000. They buy early in the day in anticipation and sell in the afternoon," a dealer said.

"The game is still being played out. Some of the strength in nickel may also be to do with events in equities markets." Swiss-based Xstrata Plc said it had effectively taken control of Canadian miner Falconbridge Ltd., as it extended its all-cash bid expiry date to give it more time to obtain remaining shares.

The bid makes Xstrata the world's fifth-biggest diversified mining company by market capitalisation and boosts its copper and nickel portfolio. Xstrata said it now owned 92.1 percent of Falconbridge's shares.

On Monday, POSCO, one of the world's largest steelmakers denied reports it had made significant bets that prices would fall, but dealers said stainless mills may have to turn down orders if they cannot find more nickel.

"Demand has bounced far more than anyone anticipated, and nickel producers have been unable to respond. What looked a few months ago to be a modest surplus, has evaporated and the price should go up," SGCIB analyst Stephen Briggs said.

Stocks of nickel in LME-monitored warehouses fell 132 tonnes overnight to 5,808, of which over 3,600 tonnes are already earmarked for delivery. Daily world nickel consumption is around 3,500 tonnes.

Compounding the supply squeeze is a strike at Inco Ltd., 54,000-tonne-per-year Voisey's Bay nickel mine in Canada.

Copper rallied $70 at $7,730, as a strike at the world's largest copper mine, BHP Billion's Escondida mine in Chile, entered its second week.

The mine was running at between 40 and 60 percent of its full capacity a company spokeswoman said.

At full throttle, the mine accounts for 8 percent of global copper production and 20 percent of Chilean output.

"The strike continues at Escondida. The price ran up ahead of the strike, but there hasn't been any follow through, despite lasting longer than many had anticipated," Sempra Metals economist John Kemp said.

"This suggests that the market believes there is sufficient material around to meet needs or that the market believes that the strike won't last much longer. Both these are plausible assumptions but they are still assumptions." Aluminium gained $17 to $2,497 a tonne after dropping, while zinc was up $45 at $3,305.

Three-month lead was up $18 at $1,185 and tin was $25 higher at $8,400.

REUTERS VJ HT1734 ,497 a tonne after dropping, while zinc was up at