Dec. 11 -- Nickel rose to a four-week high in London on prospects mining companies will accelerate production cuts in line with declining demand. Copper also gained.

Production in the past 10 years was more concentrated among a few miners than any other industrial metal such as copper, allowing nickel producers more leeway to restrain output, according to a BNP Paribas SA report yesterday. Nickel has dropped 59 percent this year as demand led by stainless steel makers slumped, swelling inventories.

Nickel miners “have been optimizing production” better than other metal producers, said Michael Widmer, an analyst at BNP Paribas in London. “Next year I think inventories will not rise as much because of the reduced output.”

Nickel for delivery in three months gained $825, or 8 percent, to $11,125 a metric ton as of 4:39 p.m. on the London Metal Exchange. A close at that price would be the highest since Nov. 13. Prices have jumped 23 percent this week.

Stainless steel demand is still shrinking and the market may not improve next year, Outokumpu Oyj Chief Executive Officer Juha Rantanen said in a statement today. Nickel supply cuts by miners including OAO Norilsk Nickel haven’t kept pace with slumping demand as inventories in warehouses monitored by the LME climbed to the highest since August 1995.

“The main problem at the moment is on the demand side,” said Eliane Tanner, a commodity analyst at Credit Suisse Group in Zurich. “Production cuts are not happening fast enough to compensate for the slowing demand.”

Nickel may trade at $9,000 to $10,000 a ton by the end of the first quarter of 2009 and to a range of $9,500 to $10,500 a year later, Credit Suisse said in a report today.