LME nickel prices have risen sharply on the back of strong fundamentals, but have gained further upside momentum on a technical squeeze, following talk of a large short position holder, traders said.

LME nickel for three-month delivery Wednesday hit a record-high of $29,250/ton, up 6.6% on the day, up 17.2% since the start of the month.

Spreads flared as participants sought to squeeze shorts unable to deliver against their positions, resulting in the tomorrow/next day spread broadening to $1,000/ton from around $150 Tuesday.

Nickel stocks have plummeted from more than 30,000 tons since the start of the year to 6,162 tons.

Canceled warrants running at 77.7% leave only 1,374 tons available to the market, making short position holders who are unable to deliver against their position an easy target for a squeeze.