LME nickel more than doubles, tops $100,000T on Russia supply risks

The London Metal Exchange (LME) cancelled nickel trading on Tuesday after an unprecedented 250% price spike triggered by Western sanctions against Russia.

Soared To A Record

Prices for the metal, mainly used in stainless steel, soared to a record above $100,000 a tonne amid a vicious short squeeze — the largest-ever on the LME.

The Cancellation Of All Trades

The 145-year-old exchange responded by halting trade, and in a later update announced the cancellation of all trades and deferring delivery of all physically settled contracts. The contract was suspended at $80,000 per tonne.

The move, BMO analyst Colin Hamilton said, will see questions resurface as to the efficacy of the LME to act as the market of last resort after the short squeeze in copper seen late last year.

“It is unlikely this is the last of extreme volatility we see in commodity markets,” Hamilton wrote.

Big Shot’s short

Bloomberg reports Chinese entrepreneur Xiang Guangda – known as “Big Shot” – has for months held a large short position on the LME through his company Tsingshan Holding Group Co, the world’s largest nickel and stainless steel producer.

About E. J. McKay

E.J.McKay is a Shanghai-headquartered investment bank with a special focus on mergers & acquisitions. We are one of the most long standing independent investment banks in China, with core business of mergers & acquisitions and financing advisory.