London Metal Exchange Halts Nickel Trading After Price Jumps Over 110% Per Ton

The price of Nickel jumped by 111% to $101,365 a ton on Tuesday following a 66% increase in price in the previous trading session. The unprecedented jump in price forced London Metal Exchange (LME) to suspend trading in its nickel market in the early hours of Tuesday after several margin calls, Investors King understands.

In the last two trading sessions, the commodity gained 177% before paring gains to about $83,500 per ton. The jump in price was a result of traders’ pricing in supply disruption ahead of expected sanctions on Russian nickel supply.

“Commodity markets are increasingly pricing in a scenario under which a significant portion of Russian supply will be excluded from the market,” Morgan Stanley said in a note. “Prices are likely to remain highly volatile, until the real supply impact becomes clearer and prices can start to settle at a new equilibrium.”

To put things in perspective, Nickel, used in making stainless steel and electric vehicle battery, has only gained $11,000 in the last 5 years before jumping more than $72,000 a ton this week alone.

“It’s going crazy — it’s not reflecting any industry fundamentals,” said Jiang Hang, head of trading at Yonggang Resources Co. The “LME trading system is out of control and requires intervention,” or the contagion may spill over to other metals, he said.

Nickel and other commodities like crude oil jumped in price as the U.S and European allies continued to increase sanctions impose on Russia to force the Eastern European nation to abandon its ongoing war with Ukraine, its former province.

These series of sanctions are expected to disrupt global supplies of commodities and increase price volatility as seen in crude oil and now Nickel.

The price of Brent crude oil rose above $130 a barrel on Monday and now nickel, an important component of several manufacturing products, jumped by over 110% on Tuesday.