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LME suspends nickel trading after unprecedented surge to above $100,000/mt

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LME suspends nickel trading after unprecedented surge to above $100,000/mt

Highlights

Trading suspended for March 8

Prices hit record $101,365/mt March 8

Other metals trading normally, being closely monitored

  • Author
  • Jacqueline Holman
  • Editor
  • Alisdair Bowles
  • Commodity
  • Metals
  • Tags
  • copper Nickel
  • Topic
  • Battery Metals War in Ukraine

The London Metals Exchange has suspended nickel trading after prices continued to rise overnight, more than doubling to hit a record high of over $100,000/mt in early trading March 8.

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In an emailed market notice, the LME said that it had decided to suspend trading at 0815 GMT for the remainder of March 8 after "unprecedented overnight increases in the three-month nickel price."

"The LME, in close discussion with the Special Committee, has been monitoring the LME market and the effect of the evolving situation in Russia and Ukraine. It is evident that this has affected the nickel market in particular, and given price moves in Asian hours this morning, the LME has taken this decision on orderly market grounds," it said in the notice.

The LME three-month spot nickel price hit 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.

On March 7, nickel had an unprecedented run skyrocketing as much as 70%, UK brokerage Sucden Financial noted March 8, adding that the cash to three-month spread tightened into $841/mt, the steepest backwardation since 2007.

In a March 8 note, financial services company ING attributed the March 7 surge to "bears buying back to cover their short positions."

As well as disabling trading in LMEselect and stopping trading on the Ring, the LME also advised that no inter-office trades should be booked for nickel.

It added that LME Clear would consider what additional measures, if any, should be taken from a risk management perspective.

Going forward, the LME said it would actively plan for the reopening of the nickel market and would announce the mechanics of this as soon as possible.

"The LME will give consideration to a possible multi-day closure, given the geopolitical situation which underlies recent price moves. In this context, the LME will also make arrangements to deal with upcoming deliveries," it said.

Related Factbox: Russian metals industry's reliance on China set to rise as sanctions disrupt supplies

It added that it would also consider whether trades booked March 8 before the suspension should be subject to reversal or adjustment and would also provide an update on this as soon as possible.

The LME said that, while its other contracts would continue to trade as normal, they would be closely monitored.

On March 7, the LME imposed a limit on the backwardation for tomorrow-next (tom-next) contracts, as well as introducing a deferred delivery mechanism for certain contracts and amending previously announced measures applied to copper contracts.