Market history · Commodities ·
Nickel doubles in a day and the LME suspends trading
On 8 March 2022 three-month nickel on the London Metal Exchange more than doubled, briefly rising above $100,000 a tonne, and the exchange suspended trading in the contract. Supply fears after Russia's invasion of Ukraine were one driver, since Russia is the world's third-largest nickel producer, and banks and shippers were cutting their Russian exposure.
Saxo Bank's Ole Hansen told CNBC the move was driven by fear and by traders with short positions who had bet on Russian supply continuing and were forced to buy back. The LME later cancelled the day's trades, which led to legal claims against it.
The episode showed how thin and leveraged commodity markets can become in a crisis.
The takeaway
In stressed markets, exchanges can halt trading and even cancel trades. That is a risk of holding commodity derivatives.
Sources
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