LME authorizes nickel position transfers; trading still halted

The London Metal Exchange said late March 9 it will allow members to perform nickel position transfers, even though nickel remains suspended from trading on the exchange following extreme price volatility.

Allowing position transfers may reduce risk within the system, it said.

"While nickel remains suspended from trading, the LME Group understands that a number of members would like to perform nickel position transfers," the exchange said in a statement on its website. "As these position transfers can provide a way to reduce risk within the system, the LME Group believes it appropriate to allow them to proceed. However, the LME and LME Clear reserve the right not to allow any specific nickel position transfer at their absolute discretion."

The LME suspended the trading of nickel March 8 after prices more than doubled to surpass $100,000 mt — reaching a record high of $101,365/mt in early trading, after closing at $48,078/mt March 7. The LME also canceled all trades executed on or after 0000 GMT March 8 in the interoffice market and on LME select until further notice.

Nickel trading had previously been suspended on China's Wuxi Stainless Steel Exchange Center on March 8 and was also suspended on the Shanghai Futures Exchange March 9 as prices rose to hit the daily limit for three consecutive days.

In order to appropriately manage the transfers, LME members may only use the LMEmercury clearing platform to undertake nickel position transfers, the LME stated. Given the unprecedented situation in nickel, the LME and LME Clear will not charge fees on any nickel trades during the period of suspension (including trades executed on or after 0000 UK time March 8), including all trades, reversals of trades and position transfers, it clarified.

The LME had previously said it did not expect to reopen nickel trading on the exchange before March 11.

"The LME and LME Clear (LME Group) have been continuing to work on the evolving nickel situation, with the intention of ensuring it is able to re-open the market, with trading continuing in an orderly manner, in an appropriate time frame," it said in the March 9 statement.

European steel producers' association Eurofer called on the LME and the UK's Financial Conduct Authority March 9 to take action to stop recent "massive" and "artificial" fluctuations in nickel prices. Nickel is an important element in the production of stainless steel and is also used to produce batteries for electric vehicles.

Eurofer said it had requested a commitment to transparency on moves by one or more market participants exceeding regular participation and trading limits, with general secretary Alex Eggert saying that the unprecedented surge in nickel prices since March 7 could not be explained by supply and demand, nor by sanctions recently imposed on Russia.