Nickel trading to restart on March 16: LME  

The London Metal Exchange (LME) will resume trading nickel contracts at 08:00 London Time on March 16, the exchange announced, and it will set daily price limits in either direction for all base metals.  

The LME was forced to cancel nickel trading on March 8 following an abnormal 250% price spike triggered by Western sanctions against Russia that pushed the price of the metal above a record US$100,000 per tonne.  

The LME attributed the “disorderly market conditions” to large short positions, combined with geopolitical news and a “background environment of low metal stocks.”  

It noted that a large client with a large short position — unnamed but understood to refer to Tsingshan Holding Group — has secured support of a banking consortium that could “mitigate” further “disorderly conditions.“ 

Tsingshan Holding Group, which had bought large amounts of nickelto reduce its short positions in the metal, reached an agreement this week with banks under which they will not make margin calls on or close out the producer’s nickel positions on the LME, according to Reuters news agency.  

“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 stated in a press release. “Market participants have raised concern regarding the risk of sudden, extreme price moves in other metals, particularly given the geopolitical backdrop.” 

Going forward, the LME said that it would heighten its monitoring on all trading and that it was reviewing the events that led up to the suspension of nickel trading. “If that review indicates that there may have been abusive activity by one or more participants…the LME has powers under the LME Rulebook to commence a formal investigation.” 

In a research note to clients, BMO analyst Colin Hamilton wrote that, “given the low inventory level and relatively extreme positioning, getting the nickel contract back to a state of normality may take some time,” but said he expects the price of nickel to settle down to the US$25,000 to US$30,000 per tonne level.  

“All deliveries against nickel contracts will be deferred until March 23 while the nickel price will have a 5% daily fluctuation limit. Moreover, all other base metals will now be subject to a maximum 15% up/down move on any trading day, though such moves have previously been very, very rare,” the mining analyst noted.