Nickel price tops $30,000 for first time since 2008 amid short squeeze

The Big Nickel at Science North, Sudbury. Photo by Phil Harvey, Wikimedia Commons.

Nickel futures jumped sharply in London to trade above $30,000 a ton for the first time since 2008 as surging prices created a short squeeze in an already tight market.

Nickel rose as much as 13% to $30,295 a ton before settling at $28,919 on the London Metal Exchange on Friday. The metal surged 19% this week for the biggest weekly jump since 2009.

The latest spike comes as clients with short positions have been stopped out of the trades, a nickel trader involved in the transactions said. Clients such as industrial hedgers have been hit with large intraday margin calls as prices have surged this week on worries of supply disruptions from Russia, and they’re now being forced to close out their positions in an increasingly illiquid market, the person said.

Global commodities markets from metal to crops to energy have been upended by Russia’s invasion of Ukraine as big corporates withdraw from the country, lenders pull back from financing deals and the threat of new sanctions deters buyers. It’s also getting increasingly difficult to transport commodities like metals, which are shipped in containers.

Russia is a key supplier of nickel, and the threat to supplies comes at a time when global stockpiles are already low and falling further. Freely available nickel stockpiles on the exchange fell to the lowest since December 2019, with two dominant parties holding the warrants, according to LME data. Cash nickel contracts traded at the biggest premium to three-month futures since 2007 on the LME, in a condition known as backwardation that signals a worsening squeeze on spot supply. 

(By Mark Burton and Yvonne Yue Li)

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