The London Metal Exchange few moments ago halts trading on its nickel market,
after an unprecedented price spike left brokers struggling to pay margin calls, Bloomberg reports
Nickel surged as much as 40%, in one of the most extreme price moves ever seen on the London Metal Exchange, as fears over Russian supplies leave buyers exposed to a historic squeeze. Barron’’ and Yahoo reports accordingly
The metal used in stainless steel and lithium-ion batteries added more than $10,000 to trade at a 15-year high above $40,000 a ton, in the biggest-ever daily dollar gain in the 35-year history of the contract. Palladium also spiked sharply higher amid rising risks to shipments from one of the world’s top producers of the metal.
*Breaking tweet by Bloomberg on London Metal Exchange
— Bloomberg Markets (@markets) March 8, 2022
Nickel’s surge builds on a 19% gain seen last week as banks cut exposure to Russian commodities suppliers and major shippers steered clear of the country’s key ports. Now,
as the U.S. weighs a potential ban on Russian oil imports, traders are questioning whether industrial consumers will elect to avoid buying other Russian raw materials.
While prices surged, a key one-day nickel spread traded at the biggest discount since 2009 on the London Metal Exchange,
while the equivalent spreads for copper and zinc also loosened dramatically. One possibility is that holders of Russian metal stored in LME warehouses have chosen to relinquish their holdings, according to two nickel traders.
“Commodity markets are increasingly pricing in a scenario under which a significant portion of Russian supply will be excluded from the market,” Morgan Stanley said in a note.
“Prices are likely to remain highly volatile, until the real supply impact becomes clearer and prices can start to settle at a new equilibrium.”
*Copper and aluminum both rose to all-time highs, as soaring oil prices and fears of supply shocks rattled raw-materials markets amid Russia’s invasion of Ukraine.