Nickel advanced in London on speculation more production cuts will help erode a global surplus of the metal used in stainless steel. Copper and aluminum also rebounded from yesterday’s declines. BHP Billiton Ltd. is closing its $2.2 billion Ravensthorpe nickel mine in Australia and part of the Yabulu processing plant. Nickel has erased gains of as much as 13 percent this year as inventories in warehouses monitored by the London Metal Exchange climbed to the highest since July 1995. “There’s speculation Yabulu might close as well,” said Robin Bhar, an analyst at Calyon in London. “It’s a high cost facility.” Nickel for delivery in three months gained $300, or 2.6 percent, to $11,700 a metric ton as of 12:41 p.m. on the London Metal Exchange. Yabulu has the capacity to produce 75,000 tons of refined nickel, with most of its supplies from Ravensthorpe, Bhar estimated. BHP declined to comment, London-based spokesman Illtud Harri said in an e-mail. All metals advanced on the LME, in line with gains in equities in Europe and Asia as U.S. efforts to support the banking system may spur investor demand. The dollar also fell against the euro, making commodities cheaper for buyers in Europe. The UBS Bloomberg CMCI Index of 26 commodities has dropped 2.8 percent this year as the dollar gained 5.2 percent against the euro. Lead is the top gainer in the commodity index this year, rising 16 percent. The three-month contract gained $15 to $1,160 a ton. Above Average Production of nickel will exceed demand through at least 2011, Bhar estimated in a report this week. Stainless steel production, which makes up 65 percent of nickel consumption, will grow 2 or 3 percent this year after falling 5 percent last year and 0.3 percent in 2007, according to the Calyon report. Aluminum and zinc are the only metals on the LME trading below their averages from 1980 to 2008, Calyon estimates show. Aluminum’s average is $1,617 a ton and zinc’s is $1,212 a ton. The three-month aluminum contract rose $26 to $1,366 a ton today and zinc advanced $5.25 to $1,150.25 a ton. Aluminum fell $43, or 3.1 percent, yesterday. Aluminum Inventories Japan’s shipments of aluminum rolled products dropped 22 percent in December, the biggest decline since April 1981, the Japan Aluminium Association said today. Prices have fallen 11 percent this year as inventories in LME-monitored warehouses jumped to more than 2.7 million tons, the highest since the contract started in 1978. Inventories may rise to as much as 3.5 million tons by the second quarter, Bhar said. Copper jumped $27 to $3,337 a ton after falling $245 yesterday. Tin rose $25 to $11,525 a ton.

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