LME nickel trading to resume March 16

The London Metals Exchange has announced that nickel trading will resume at 8000 GMT on March 16.

Trading was halted at 0815 GMT March 8 after prices more than doubled to more than $100,000/mt in early trade.

The LME three-month spot nickel price reached an all-time high of $101,365/mt in early trading March 8 after closing at $48,078/mt on March 7. It had dropped back to $80,000/mt as of 0815 GMT when the suspension took effect.

The LME said late-March 14 that the suspension had taken place "against the backdrop of widely reported large short positions (originating primarily from the OTC market), combined with geopolitical news-flow and a background environment of low metal stocks."

Since then, the LME said it had been working with stakeholders to assess current market conditions and the conditions for the resumption of trading.

"The LME notes in particular that a large client of the market has now published details relating to the support of a banking consortium, which could suggest that the potential for further disorderly conditions may be mitigated," it said in a statement.

The exchange added that it had concluded its analysis of the proposed voluntary netting arrangement and in light of limited potential uptake, had concluded that it was not appropriate to undertake this at this time.

Daily price limits

The LME has put in some operational measures in place to support the resumption of trading, including daily price limits to all metals, which will take effect March 15 for all metals aside from nickel and from the March 16 resumption for nickel.

"Whilst price moves in the nickel market have been a key focus, the LME has observed high levels of volatility across the base metals markets more broadly," the LME said.

"Market participants have raised concern regarding the risk of sudden, extreme price moves in other metals, particularly given the geopolitical backdrop. Having regard to such concerns and its own assessment of market conditions, the LME has taken the decision to set daily price limits in either direction for all base metal outright contracts, on all execution venues," it added.

The LME has decided that the upper and lower daily price limits for any outright contract will be its previous business day's three-month contract closing price, plus or minus at least 5%, having previously guided 10% for nickel or 15% for all other base metals.

For March 16 trading, the closing price used to determine the limits for nickel will be that of March 7.

Other measures

The measures also include deferring to March 23 the delivery at level of all nickel contracts entered into prior to March 16 and due for delivery between March 16 and March 22 inclusive, as well as temporary revising accountability levels for nickel to 3,000 lots from 6,000 lots on an aggregate basis, including over-the-counter positions.

Members will also have to provide additional information and periodic reports to the LME in relation to aggregate on-exchange and OTC nickel positions.

"The LME has also received many comments as to the broader parameters of the nickel contract -- and, in particular, the low stock environment for LME deliverable-grade nickel, which could be capable of exacerbating situations such as the present one," it said.

It added that it would also ensure that it fully considered these broader parameter concepts, including, for example, enhanced position limits, further transparency as to position-holders and a broader set of deliverable physical nickel grades.