As the Russian invasion of Ukraine escalates, Russia is being endowed with multiple sanctions from all over the world.
Recently, the London Metal Exchange (LME) has reportedly halted the trade of nickel after prices rose to a record-breaking value of $100,000 per ton, to cover short positions after sanctions by the West threatened supply from important Russian producers.
As per sources, this has created a panic in the market with buyers scrambling for the crucial metal to make electric vehicle batteries and stainless steel.
LME, a leading global commodity exchange, has taken this decision on orderly market grounds, considering a halt of several days.
Due to LME’s closure, there has been a raise in margin needs for nickel contracts by 12.5 per cent to $2,250 a ton, effective immediately, and deferred the nickel trade across all venues for the rest of the day.
For the uninitiated, London Metal Exchange is looking forward to plan its reopening of the nickel market and will inform the market regarding its mechanics soon.
According to sources, LME’s three-month nickel price almost doubled to $101,365 a ton before the company stopped trading on their electronics system and in the open outcry ring.
Susannah Streeter, Market Analyst and Senior Investor at Hargreaves Lansdown, commented that the halt in trading prompted a huge margin call with serious gains pressuring speculators to scramble for more capital to incorporate into account to cover the shortfall.
Reportedly, the exchange stated that members with short positions and not being able to borrow or deliver metal at a backwardation of not more than 1% of the previous day’s cash price might have their delivery deferred by the exchange, assisted by LME instructions.
For the record, Russia supplies 10% of the world’s nickel, while Russia’s Nornickel is the leading global supplier of battery-grade nickel at 15-20% of the worldwide supply, quoted Dominic O’Kane, Analyst at JPMorgan.