The London Metal Exchange (LME) was forced to halt nickel trading and cancel trades after prices doubled recently to more than USD 100,000 per tonne in a surge sources blamed on short covering by one of the world’s top producers.
The LME’s shock move came as Western sanctions threatened supply from major producer Russia and marked the biggest crisis to hit the 145-year-old exchange in decades.
China’s Tsingshan Holding Group had been building a short position in nickel since last year, betting prices would fall.
Prices rocketed as Tsingshan bought large amounts of nickel to reduce those short bets and its exposure to costly margin calls.
The LME raised margin requirements for nickel contracts by 12.5% to USD 2,250 a tonne and suspended nickel trading on all venues for at least the rest of the day.
The LME also deferred physical delivery of maturing contracts and announced it would temporarily stop publishing official and closing nickel prices.
