LME Nickel Crosses $100,000 on Russian Supply Disruption Fears
By Yongchang Chin
The three-month nickel contract on the London Metal Exchange briefly crossed the $100,000-a-ton mark for the first time ever on Tuesday as the war in Ukraine fuels fears of Russian supply disruptions and spurs short-position covering.
The LME contract rose as much as 111% to $101,365 a ton, more than triple its level a week ago. The contract pared gains shortly afterward, and was last 69% higher at $81,025 a ton.
Vivek Dhar, mining and energy commodities research director at Commonwealth Bank of Australia, said traders are seeking to cover short positions as prices rise due to concerns that Russian supplies of the metal could be cut off from global markets.
“The price rise is a physical-market issue which has been translated to a financial-market issue,” he told Dow Jones Newswires. “Traders who have short positions or who are on the wrong side of trades are trying to cover their positions” amid a tight market and elevated prices, Mr. Dhar added.
Russia accounts for 5%-6% of the world’s nickel supply and has a 17% share in high-purity nickel production, which is used to make electric-vehicle batteries, according to CBA. That adds pressure to a market that was tight even before Russia invaded Ukraine, as global stockpiles had dwindled significantly from April last year, the bank said in a research note.
Brokerage Marex said the metal’s trading liquidity appeared to be drying up.
“It does seem inconceivable for many that nickel has been squeezed to such an extent” as sellers back off, Marex said in a research note, adding that physical buyers have also “basically backed off with the rally.”
“Until the dust settles,” it said, “consumers are unlikely to buy any spot tonnages.”
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