Nickel drops 12% to hit cap again on London Metal Exchange

Traders, brokers and salespeople on the exchange vehemently open at the London Metal Exchange in London, United Kingdom, on Monday, February 28, 2022.

Chris J. Ratcliffe | Bloomberg | beautiful pictures

LONDON – The benchmark three-month nickel contract fell 12% on Friday morning to hit a new trading limit, as heavy selling continued in international metals markets.

According to Refinitiv data, the price hit $36,915/ton when it opened for trading. The 145-year-old exchange, which still has some vehement trading open, has had a wild two weeks with rising prices, technical glitches and trading halts.

On March 8, the price of nickel more than doubled Within hours, it climbed above $100,000 a ton as one of the world’s top producers, China’s Tsingshan Holding Group, bought in bulk to reduce short-term bets on the metal. Trading was halted as the move exacerbated a rally at a time when the metal was spiraling upwards due to Russia’s growing conflict in Ukraine.

Then, on Wednesday, the LME attempted to resume nickel trading after a rare close. But the “systemic error” allowed a small number of transactions to pass below the newly imposed daily price limit and the exchange was temporarily halted once again.

The LME installed a trading range of 5% on Wednesday, which was extended to 8% on Thursday and then 12% on Friday.

Speaking ahead of Wednesday’s opening, Matthew Chamberlain, CEO of LME, told CNBC’s “Squawk Box Europe” that the exchange is “fully mindful of the impact this is having on so many people and we need to make sure that doesn’t happen” doesn’t happen again. “

Chamberlain said the LME has “intentionally prioritized stability” by setting a relatively narrow range of daily trading limits, but these limits could soon be widened if the exchange observes a “more orderly market.”

Commodity prices have spiked on supply concerns linked to Russia’s onslaught on Ukraine, with the ongoing war and a slew of Western sanctions raising fears of disruption.

—Sam Meredith of CNBC contributed to this article.

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