Metals traders endured a chaotic day yesterday as the highly anticipated reopening of the nickel market came to an abrupt halt in the morning before resuming again after lunch.
The London Metal Exchange stopped nickel trading minutes after reopening at 8am. The price of the metal had slipped by 5 per cent after a “systems error” that had allowed a small number of trades to go through below the new daily price limit.
Trading was suspended last week in an effort to restore order to the market. After investigating the technical issue, the LME reopened nickel trading at 2pm.
Nickel prices have surged amid fears that Russia’s invasion of Ukraine will disrupt supplies of the metal, which is used to make stainless steel and electric car batteries. On March 8, the exchange suspended trading after it was gripped by a short squeeze that caused the price to soar, with its benchmark three-month nickel futures briefly doubling to above $100,000 a tonne, by far its record level and its biggest jump.
To prevent wild price swings, the 145-year-old exchange has introduced circuit breakers that limit movements in the nickel price in either direction to 5 per cent.
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The exchange, which is considering allowing the price to rise or fall by more than 5 per cent, said it would notify participants in due course of the opening procedure for the start of nickel trading today. It added that it would not publish official nickel prices as long as prices moved to their daily limit.
The turmoil has been a blow to the exchange, which sits at the heart of the world’s trading of industrial metals.
