On the London Metal Exchange, nickel momentarily surpassed $100,000 per tonne amid a short squeeze that impacted a large Chinese bank and caused a revision in the regulations of one of the world’s top commodities exchanges.
On Tuesday in Asian trading, the metal used to make stainless steel and electric vehicle batteries rose 111 percent to $101,365 per tonne before falling 74% to $83,500 per tonne.
The dizzying rise of metal
The LME market is undergoing a contraction, with large short positions being required to be covered amid a period of limited liquidity. Nickel has risen at a fast pace of $11,000 per ton in the last five years, with a recent leap of $72,000.
“It’s insane, and it has nothing to do with industry fundamentals.” “The LME trading system is out of control and requires action, or else the contamination will extend to other metals,” said Jiang Hang, Yonggang Resources Co.’s head of trade.
Even before Russia’s invasion of Ukraine, nickel prices were increasing due to restricted supplies, raising fears of a supply deficit. If nickel prices continue to rise, the cost of electric vehicle batteries will also rise, complicating the shift to other energy sources.
“However, given the unpredictability of the war, it’s difficult to talk about revaluation of goods in this scenario,” said Gavin Wendt, an analyst at Mine Life Pty.