The London Metal Exchange (LME) was forced to halt trading in nickel and said it would cancel trades as prices doubled to more than $100,000 per tonne on Tuesday, a surge sources blamed on short covering by one of the world's top producers.Nickel prices more than doubled on Tuesday, forcing the London Metal Exchange to halt trading, due to an unprecedented short squeeze caused by low inventories and Russia supply concerns.Three-month nickel on the London Metal Exchange was up 66% at $80,000 a tonne when trading was stopped, having earlier jumped almost 111% to a record $101,365.
Russia supplies the world with about 10% of its nickel needs, mainly for use in stainless steel and electric vehicle batteries. It also produces about 6% of the world's aluminium. The London Metal Exchange (LME) was forced to halt trading in nickel and said it would cancel trades as prices doubled to more than $100,000 per tonne on Tuesday, a surge sources blamed on short covering by one of the world's top producers.The trading shutdown after Western sanctions threatened supply from major producer Russia is the biggest crisis to hit the 145-year-old exchange in decades.The LME move came amid market panic caused by Russia Ukraine conflict, with buyers scrambling for the metal crucial for making stainless steel and electric vehicle batteries."The current events are unprecedented," the LME said in a notice to members. "The suspension of the nickel market has created a number of issues for market participants which need to be addressed."Some position holders have been struggling to pay margin calls, traders said.
The LME raised margin requirements for nickel contracts by 12.5% to $2,250 a tonne and suspended trading of nickel on all venues for at least the rest of the day. read more"For the LME to stop trading for an entire day, that doesn’t help its long-term relevance," said Colin Hamilton, managing director of commodities research at BMO Capital Markets. "This is meant to be a market of last resort and people can't get inventories to deliver against positions."The LME announced that all trades will be voided from midnight until 8:15 a.m. on Tuesday when trading stopped and added that it was considering a closure of several days.In another rare move, it also deferred physical delivery of maturing contracts."The LME will actively plan for the reopening of the nickel market, and will announce the mechanics of this to the market as soon as possible."Three-month nickel on the LME more than doubled to $101,365 a tonne before the LME halted trade on its electronic systems and in the open outcry ring.Nickel had pared gains to $80,000 a tonne when trading was halted, up 66% on the day and a staggering 177% since Monday.
