LAST UPDATE: 11.51
The London Stock Exchange (LME) has suspended trading in nickel after a historically unprecedented price spike that has left many brokers unable to cover margin calls against loss-making short positions, in an overwhelming compression that has overwhelmed nickel in the world, as well as a large Chinese bank.
Nickel, used in stainless steel and electric car batteries, has temporarily jumped to over $ 100,000 a tonne in London, rising by as much as 250% in two days, with main concern being whether supply from Russia on the international market will continue or not smoothly.
The crisis is reminiscent of the darkest period of the LME, the “Tin Crisis” of 1985, during which trading stopped for four whole years, “throwing” a large number of brokers out of the market. The cause then was the collapse of the Tin International Council, a body backed by 22 governments, when they could no longer agree to jointly support its honor.
“This is the second worst situation since the Tin Crisis,” said Malcolm Freeman, a broker at Kingdom Futures who began his LME career in 1974. ” “the trading session took place from Tuesday morning until the close of trading,” he told Bloomberg.
The material came to be reinforced up to 111%στα $ 101,365 the tone, having already closed on Monday with a rise of 66%. At 9.10 Greek time on Tuesday, it had fallen slightly, winning just … 74%στα $ 83,500 the tone.
Short position holders are forced to cover them in a period of low liquidity. In the last five years, the price of nickel per ton has risen by just $ 11,000 per ton, while in the last week alone it has gained 72,000.
“It ‘s starting and going crazy – it’ s not a reflection of any real fundamentals of the industry,” said Jiang Hang, an executive at Yonggang Resources. As he stressed, “the trading system of the London Stock Exchange (LME) is out of control and needs intervention”, otherwise this situation will spread to other metals.
Late Monday night, the LME decided to allow traders not to meet delivery obligations for all major contracts – including nickel – in an unusual turn for the 145-year-old, which is considered a “last resort” market. “for metals. The LME also allowed an arm of China Construction Bank to delay the payment of hundreds of millions of dollars in margin calls due on Monday, according to sources in the Bloomberg agency.
Nickel was on the verge of supply even before the Russian invasion of Ukraine, which heightened fears of shortages of basic commodities. Higher prices for the metal, if maintained, create a risk of a surge in the cost of electric vehicles and therefore a derailment of the energy transition to “green” energy.
Russia produces 17% of the world’s highest quality nickel.
Source: Capital
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