“It’s going crazy” – LME suspends nickel trading as price doubles to $100,000

The nickel price has surged by as much as 250% in just two days, causing the London Metal Exchange (LME) to suspend nickel trading with brokers struggling to pay margin calls against unprofitable short positions.

Nickel, used in stainless steel and lithium-ion batteries, more than doubled this morning to a record high above $100,000 a tonne on the LME, before easing back. The astonishing surge is being driven by responses to the Russian invasion of Ukraine.

International banks have been cutting their exposure to Russian commodities suppliers and major shippers have been avoiding the country’s key ports, sending metal prices dramatically higher.

In response to the stratospheric nickel price movement this morning, investors and industrial users who had sold the metal scrambled to buy the contracts back. Russia is the third largest producer of nickel.

“It’s going crazy – it’s not reflecting any industry fundamentals,” said Jiang Hang, head of trading at Yonggang Resources Co. “[The] LME trading system is out of control and requires intervention,” or the contagion may spill over to other metals, he said.

Late Monday, the LME moved to allow traders to defer delivery obligations on all its main contracts — including nickel – in an unusual shift for a 145-year-old institution that touts itself as the ‘market of last resort’ for metals.

The LME also gave a unit of China Construction Bank Corp extra time to pay hundreds of millions of dollars in margin calls that were due Monday, according to people familiar with the matter.