Nickel price

2022 - 3 - 8

Nickel

Post cover — Image courtesy of "Fast Company"

Why is nickel up? Dramatic price increase sparks LME trading halt ... (Fast Company)

The base metal's price has skyrocketed with a spike that led the London Metal Exchange to halt trading.

(While Russia also supplies a significant percentage of the world’s aluminum, that metal has seen nowhere near the buying frenzy, and even lost more than 7% Tuesday.) One ING commodities strategist described the nickel market as “absolutely insane” to Reuters: “The fundamentals alone won’t be able to explain these prices.” Another pointed a finger at Tsingshan as a catalyst. Nickel is also historically the most volatile of the metals. But it might’ve been less surprising to somebody watching the evolving Russia-Ukraine conflict, who is also knowledgeable about the geopolitics of metal.

A stunning day for nickel prices (The Sudbury Star)

Bloomberg News said nickel surged to a record high in one of the most extreme price moves ever seen on the London Metal Exchange, as fears over Russian supplies ...

“The nickel price rally could be another source of earnings upgrades for Vale, which we believe is undervalued.” But if the kind of nickel gains seen over the past few days are sustained, those percentages will change and Vale’s earnings will get a big jolt. Nickel prices have doubled in the past five trading days as intensifying fears over Russian supplies leave buyers exposed to a historic squeeze. Nickel’s stunning surge was just one part of a tumultuous start to the week across energy and commodities, Bloomberg said. That topped a previous record of $51,800 reached in 2007. Russia’s invasion is the main reason behind the dramatic increase in price.

'This has never happened before in the history of the nickel market ... (Fortune)

Nickel prices topped $100000 per tonne on Tuesday, leading to some drastic moves by the London Metals Exchange.

This drives the price even higher. A short squeeze happens when an unusual number of traders short, or bet against, an asset. Nickel prices went nuclear on Tuesday, more than doubling to top $100,000 per tonne before the London Metal Exchange (LME) was forced to step in and halt trading for the next few days.

Nickel price spike “purely financial” but Tsingshan effect could linger (MINING.com)

Nickel price plunges in Shanghai following historic short squeeze on Chinese stainless steel giant in London.

Bloomberg reports another headache for Tsingshan as it attempts to exit its position is the fact that the company’s output does not match the grade of nickel used in settlement on the LME, the contracts aren’t a perfect hedge. March SHFE nickel contracts fell as much as 7.2% to 236,000 yuan ($37,352) per tonne while metal for August delivery slumped by the daily limit to 211,500 yuan (33,472) a tonne. After a chaotic couple of days that saw the price spiking 250% to a high of $101,365 a tonne, nickel trading remains suspended in London. The LME has announced it is unlikely to restart before Friday.

Nickel prices leap to a record over global supply fears and short sales (The Globe and Mail)

LME suspended trading in nickel on Tuesday after unprecedented price spike.

Nickel is one of the workhorse metals of the global economy. Brazil’s Vale Ltd. bought Inco Ltd., the operator of both major mines in Sudbury and Voisey’s Bay in Labrador. Xstrata PLC, now Glencore PLC, bought Falconbridge Inc., the operator of mines in Sudbury, as well as Raglan in Quebec. Canadian Royalties Inc. sold the Nunavik nickel project in northern Quebec to Chinese state-owned enterprise Jilin Jien Nickel Industry Co. Ltd. The disruption in the nickel market follows volatility in other commodities since Russia invaded Ukraine. Crude oil, potash and wheat have exploded in price because of Russia’s importance as a supplier. In 1980, the Hunt brothers of Dallas famously manipulated the silver market, and were instrumental in the price of the precious metal rocketing five-fold in a few months. The nickel price jammed dramatically higher in a matter of hours, leaving shorts with massive paper losses. When a nickel futures contract is sold short, traders borrow the securities from a brokerage, and then immediately sell in the hope the price will fall.

Why is nickel trading suspended on the London Metal Exchange? (Quartz)

A short squeeze has left Chinese metal giant Tsingshan facing billions in trading losses.

But the rush to buy back loss-making contracts in turn pushed up prices more. As prices surged amid fears of supply disruptions from Russia, which accounts for 9% of global production (pdf), traders who were shorting nickel—i.e., betting on nickel prices to fall—rushed to close out their positions. Investing aficionados on Reddit’s r/WallStreetBets channel then figured out that hedge funds that were shorting GameStop were vulnerable to a short squeeze, our colleagues wrote. When the stock price drops to $5 the next week, they buy the shares back, return them, and pocket a $5 profit. The short investorborrows a stock, let’s say at $10, and sells it. Prices for nickel, used in stainless steel and electric vehicle batteries, had already been rising in recent weeks due to concerns over supply disruptions stemming from the Russia-Ukraine war.