NEWYORK, May 19 -- U.S. steelmakers are paying the highest premium for nickel in at least 14 years as a strike by Vale SA workers in Canada curbs supply, according to CRU Group.

The premium, added to the price of metal for immediate delivery on the London Metal Exchange, is at 105 cents a pound for deliveries to Baltimore warehouses, according to CRU. The fee was at 100 cents in April and 68 cents in January.

"It's a record," said Vanessa Davidson, a London-based analyst at CRU, which has data going back to 1996. "The Midwest premium has actually been running at really high levels for some time now because of the Vale Inco strike."

Nickel traded on the LME advanced 15 percent this year, the best performer among the six main metals traded on the bourse. The dispute at Vale's Sudbury operations in Ontario started in July and has become the longest strike in the Rio de Janeiro- based company's 67-year history. The Sudbury smelter has operated at 50 percent capacity since January.

Nickel prices also jumped this year after demand surged. World stainless steel output rose 55 percent to 7.47 million metric tons in the first quarter, according to the International Stainless Steel Forum. Nickel increases the resistance of stainless steel to corrosion.

"The combination of an improvement on the demand side coupled with the strike has been the key reason," said Davidson, who expects a 50,000-ton supply shortfall this year.

Vale's Canadian operations produce about 150,000 tons of nickel a year, according to Barclays Capital, which estimates global output this year at about 1.4 million tons.