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The London Metal Exchange (LME) halted Nickel trading on Tuesday after prices doubled to a record $100,000 per tonne, fuelled by a race to cover short positions after Western sanctions threatened supply from major producer Russia, reported Reuters.
"The LME has taken this decision on orderly market grounds," said the LME, adding it was considering the closure of several days.
LME took action is because some position holders have been struggling to pay margin calls, noted traders.
What Happened: Margin requirements for nickel contracts raised by 12.5% to $2,250 a tonne, effective close of business Tuesday, and suspended nickel trading on all venues for at least the rest of the day.
"The LME will actively plan for the reopening of the nickel market and will announce the mechanics of this to the market as soon as possible."
What Prompted It: This highlights the market panic created by Russia's invasion of Ukraine, with buyers scrambling for the metal crucial for making stainless steel and electric vehicle batteries.
Russia supplies about 10% of the world's nickel, along with Russia's Nornickel being the world's biggest supplier of battery-grade nickel at 15%-20% of global supply, stated JPMorgan analyst Dominic O'Kane.
iPathA Series B Bloomberg Nickel Subindex Total Return ETN (NYSE:JJN) is up 17.3% premarket at $79.16 on the last check Tuesday.
Photo via Wikimedia
