LONDON -- London Metal Exchange nickel traded above the key psychological level of $40,000 per tonne on Wednesday as tight warehouse supplies dwindled further.
Tin also recorded a new high before investors decided to take home profits. Most other metals drifted lower.
"For the moment it (the market) is extremely tight and no one wants to short nickel right now," analyst Jon Bergtheil at JP Morgan said.
In early trade, nickel hit a new all-time high of $40,250 a tonne. It was indicated at $39,300/39,500 by 1141 GMT versus $39,900.
The price has risen by 20 percent since the start of the year on top of gains of 150 percent in 2006.
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"Nickel has broken $40,000 and nothing has changed -- there is a very severe shortage of nickel," an LME trader said.
"We have to get used to higher prices - just blue sky."
Analyst Michael Widmer at Calyon said in a report nickel consumption would remain high and limited supply was coming through, so prices should remain well above their historic average.
However, prices might correct from current highs towards the end of the first quarter due to a deceleration in the growth rate of stainless steel output, Widmer said.
Stainless demand accounts for about two-thirds of total nickel offtake.
Available nickel stocks in LME warehouses fell to 2,064 tonnes, or just over half a day of world consumption.
Volumes were thin as the Shanghai Futures Exchange is closed for Lunar New Year from February 17, re-opening on February 26.
TIN AT RECORD
Tin was at $13,600/13,700, up $200, after hitting a new high in earlier trade at $13,800.
The market is awaiting a deadline this week in Indonesia, where smelters have to verify the source of their ore and the purity of their refined tin to secure an export permit.
Lead was down $30 at $1,795/1,805 after touching a record $1,840 on Tuesday.
Speculative buying after Xstrata declared force majeure at its Northfleet refinery near London has driven prices to a series of peaks. Also, stocks in European LME-warehouses are depleted.
Rising inventories in aluminium was sending a signal to the market that prices of some metals might hace peaked, Bergtheil said.
Aluminium fell $21 to $2,724/2,727. LME stocks rose to their highest since March 2006 at 779,700 tonnes, up by 12 percent since the start of the year.
"There is really no shortage of aluminium and there is no shortage of its raw material alumina," Bergtheil said.
Aluminium touched a record high of $3,310 in May 2006.
Copper was $60 lower at $5,670/5,690. The price has fallen by some 35 percent since its peak of $8,800 on May 11.
"Aluminium is a key senior metal and the market is asking itself -- are we in a downtrend for these metals or not?," Bergtheil said.
On Tuesday, the International Aluminium Institute reported a further sharp rise in Chinese production in December-January.
Zinc was indicated at $3,270/3,290 against $3,325 on Tuesday.
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