The London Metal Exchange (LME) suspended trading of all nickel contracts on Tuesday as prices momentarily raced beyond $US100,000 ($137,404) per tonne.
“Following further unprecedented overnight increases in the three-month nickel price, the LME has made the decision to suspend trading for, at minimum, the remainder of today,” the global commodities trader stated on Tuesday.
Nickel trading on the LME remained suspended at the time of writing, and the platform had not yet indicated when it would reopen.
“At the current time, all clearing members have met their margin requirements to LME Clear in full,” the LME said. “However, the LME understands that credit conditions in the broader commodities markets have been placed under stress due to geopolitical events and rising prices.
“The LME does not consider it appropriate to announce a trading resumption date for nickel, given continued uncertainties in the broader market.”
The LME set out two criteria for nickel trading to recommence, including “operational procedures to effect a safe re-opening” and “analysis of the possibility of netting-off long and short positions prior to re-opening”.
As part of the first criteria, the LME said it would recommence trading at or around 9am London time on the resumption date.
“This is designed to ensure that maximum liquidity will be available to support the contract,” the commodities trader said. “A 9am opening time would be maintained until such date as the LME is confident to return the nickel market opening time to 1am.”
The LME would also include a maximum limit-up and limit-down for all outright nickel contracts of 10 per cent in either direction.
“On the resumption date, this will be relative to (i.e. 10 per cent either side of) the closing prices on March 7,” the LME said.
“This would cap the maximum outright move which can occur following the resumption of trading, and allow the consequent impacts (in particular, the need for additional margin to be paid) to be managed in an orderly manner.”
Commodity prices have surged across the board as the world imposed economic sanctions on Russia in response to its invasion of Ukraine.
Copper, aluminium and coal prices jumped to record highs, while gold and iron ore prices have also been on the up.
Update: the LME said it would not be able to recommence nickel trading on Friday March 11.
In a statement, the LME said it was working through “appropriate operational procedures to effect a safe reopening”. This included particular price bands, both for nickel and all other physically-deliverable contracts.