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Suspension of nickel trade continues

The London Metals Exchange has maintained its suspension of nickel trading, as commodity prices continue to climb to all-time highs in response to Russia’s intensified attacks on Ukraine.

At the epicenter of the global metal trade, the LME has found itself caught in the fallout of the Russian-Ukrainian conflict. The 145-year-old stock exchange suspended nickel trading on March 8 after prices for the metal, of which Russia is the world’s fourth largest producer, jumped 250% in two days to a record high of more than 100 $000 a ton, according to S&P. Global commodity outlook. The LME kept its nickel market closed today and said it would continue to do so tomorrow. The halt in nickel trading, a decision not seen since the stock exchange decreed a similar suspension of tin trading in 1985, would be reversed when “operational procedures for effecting a safe reopening” and analyzes of the possibility to “offset long and short positions” are available “as soon as possible”.

“The fallout from Russia’s invasion of Ukraine and the subsequent sanctions imposed by the U.S. and European governments has been a factor behind greatly heightened fears that exports of nickel from Russia, one of world’s largest producers of mined and primary nickel, could be disrupted,” Jason Sappor, principal analyst for S&P Global Commodity Insights, told S&P Global Market Intelligence. “This triggered panic buying in an already tight primary nickel market, supporting the recent surge in the LME nickel price.”

The market reaction to Russia’s invasion of Ukraine, particularly in the form of a spike in nickel prices and the suspension of trade, reflects concerns among industry players about how sanctions will affect the global metals market, how the underlying nickel supply crunch could worsen if suppliers cannot deliver to market, and how to contain the deep consequences of the crisis. For example, prolonged high nickel prices could drive up the costs of electric vehicles, as the metal is a key component of the multiple types of lithium-ion batteries used to power them.

“The fundamental story for nickel was pretty bullish before the Russian invasion of Ukraine,” Tom Mulqueen, head of research at metal derivatives broker and trader Amalgamated Metal Trading, told S&P Global Market Intelligence. “It just added fuel to the fire and started this chain reaction of margin calls. You have shorts who weren’t able to meet their margin calls, and it just reinforced itself in price.I don’t think anyone was anticipating the scale or pace of what we saw.

Nickel is one of many metals whose price has skyrocketed since Russia first invaded Ukraine on February 24. Main metals benchmarks have risen significantly since late February, and the price of uranium topped $50 a pound for the first time in a decade last week.

Today is Monday, March 14, 2022and here is today’s essential intelligence.

Written by Molly Mintz.

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