PremiumNickel trading ended almost as soon as it had begun, and the exchange subsequently said it had suspended trading to investigate a potential technical issue with the trading limit
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The London Metal Exchange (LME) halted nickel trading minutes after it started, citing a technical issue with its new daily limit, as prices plunged immediately when trading resumed after a week-long suspension.
Trading in nickel ended almost as soon as it had begun, and the exchange subsequently said it had suspended trading to investigate a potential technical issue with the trading limit. Only 206 lots, or 1,236 tons of nickel, changed hands before the market stopped trading within seconds on Wednesday morning. Most of those trades took place at the limit price of $45,590 a ton. Several trades appeared to be at prices below the 5% limit, suggesting they may later be canceled by the exchange.
“Following re-open, the market moved to its limit down pricing band," the LME said in a statement. “We have now halted the market to investigate a potential technical issue with the limit down band, and will update as soon as possible."
On March 8, the LME had halted trading in its nickel market after an unprecedented price spike left brokers struggling to pay margin calls against deeply unprofitable short positions.
Nickel, used in stainless steel and electric-vehicle batteries, surged as much as 111% during the Asian day last Tuesday to trade briefly above $100,000 a ton. The frenzied move -- the largest-ever on the LME -- came as investors and industrial users who had sold the metal scrambled to buy the contracts back after prices initially rallied on concerns about supplies from Russia, while brokers rushed to collect margin payments to cover their deeply unprofitable positions.
The massive short squeeze in nickel has embroiled a major Chinese bank as well as the largest producer of nickel, according to people familiar with the matter. 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.
Today's slump is a sign that last week’s historic short squeeze is easing. It narrows the gap between nickel contracts on the Shanghai Futures Exchange, which have continued trading during the suspension.
More than 8,600 contracts, or 51,600 tons of nickel, were offered for sale in the electronic order book as the market opened, versus 3 contracts bid.
Shanghai Futures Exchange contracts closed up 8.6% at 235,200 yuan ($37,048) a ton, but remained below LME prices before the London market opened.
(With inputs from Bloomberg)
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