Industry News

Nickel Booms on short squeeze while other metals retreat

March 8, 2022

Nickel prices more than doubled on Tuesday, forcing the London Metal Exchange (LME) to halt trading in the metal used in stainless steel and batteries for electric vehicles, while aluminium retreated from record highs.

LME three-month nickel was up 66% at $80,000 a tonne when trading was stopped, having earlier been driven to a record $101,365. Three sources told Reuters China's Tsingshan Holding Group was forced to cover short positions as prices rallied on worries over supply delays and logistics headaches resulting from Russia's invasion of Ukraine. read more

Russia supplies the world with about 10% of its nickel needs and also produces about 6% of the world's aluminium.

The LME was forced to halt trading in nickel and said it would cancel trades after the price rally. 

The buying frenzy whipped metals prices higher in early trading, with zinc jumping as much as 18.4% to a record $4,896 a tonne while lead rose as much as 9.4% and tin hit a record $51,000.

By 1715 GMT zinc was up 1% at $4,157, lead rose 2% to $2,497, tin climbed 4% to $49,449 and copper was 0.7% down at $10,207.

Aluminium sank 7.6% to $3,456 after hitting record a $4,0734.50 in the previous session.

In an attempt to maintain market stability, the LME has also imposed a backwardation limit and delivery deferral mechanism for physically settled base metals contracts, citing the Russia-Ukraine conflict and tightness in the market.

Inventories of nickel in LME-registered warehouses stand at 75,012 tonnes, their lowest since 2019. Stocks of aluminium are at their lowest since 2007 at 779,350 tonnes.