Nickel trading halted as metal crosses $100,000 per ton

London: The London Metal Exchange (LME) halted nickel trading and cancelled trades as prices of the metal, used in the manufacturing of stainless steel and batteries for electric vehicles, more than doubled on March 8 to over $100,000 per ton.

The unprecedented price surge followed the massive squeeze on the world’s top producer, Russia, following its invasion of Ukraine. Investors and industrial users scrambled to buy contracts on concerns of disruption of supply, leading to the largest-ever crisis in the 145-year-old exchange in decades. Brokers struggled to pay margin calls against unprofitable short positions.

Russia is a major supplier of the metal, providing about 6 percent of the world’s nickel, according to The Wall Street Journal. Further, Russia’s Nornickel is the world’s biggest supplier of battery-grade nickel, making up for about 15-20 percent of the global supply, Reuters quoted JPMorgan analyst Dominic O’Kane as saying.

On March 8, LME three-month nickel, which is the primary pricing reference for the global physical supply chain, rose to $101,365 a tonne from $30,000 on March 4.

The exchange stepped in and halted trading, suspending the contract at $80,000. The exchange said all trades conducted on March 8 up until then will be cancelled until further notice.

On the Shanghai Futures Exchange in China, nickel hit its upper limit at 267,700 yuan ($42,380.39) per tonne. It also breached the 15 percent limit early on March 8.

China’s biggest futures company CITIC Futures told its clients that it would take action if nickel prices continued to jump on March 9. The Shanghai exchange could take forced position cuts, Reuters reported.

The reports said the LME was forced to halt trading when it realised that some small traders were facing large demands for extra cash to cover trades put on for clients.

Image courtesy of (CGTN)

Share this post