From SP Angel (corporate finance broker and AIM market Nomad):
Nickel soars to $101,000/t on short squeeze as Chinese firms takes hit
- Nickel, having soared 66% on Monday, climbed an additional 111% to $101,365/t today.
- The LME has suspended trading in Nickel at at $80,000/t.and is considering ‘a possible multi-day closure’ amid the unprecedented price action.
- Short covering has sent prices to around two times the previous all-time high as margin calls force the closure of positions hitting a number of major Chinese banks and their clients hard.
- Xiang Guangda, known as ‘Big Shot’, is reported to have taken a significant short position through his company Tsingshan, China’s largest nickel and stainless-steel producer with a potential $5bn hit.
- Reports from February suggested a single mystery stockpiler had amassed over 50% of all LME nickel inventories representing around 43,000t worth around $3.7bn at $85,000/t. (Bloomberg)
- Markets were already tight before Russia’s invasion of Ukraine, with forecasts of a 100,000t deficit in 2022.
- Russia produces 17% of battery-grade nickel and 7% of total global nickel supply.”
The LME has been monitoring the impact on the LME market of the situation in Russia and the Ukraine, as well as the recent low-stock environment and high pricing volatility environment observed in various LME base metals and in particular Nickel. With immediate effect, and following the suspension of the LME Nickel market announced in Notice 22/052, the LME (acting where required through the Special Committee) has determined that it is appropriate in the circumstances to take the following actions in respect of physically settled Nickel Contracts: (i) cancel all trades executed on or after 00:00 UK time on 8 March 2022 in the inter-office market and on LMEselect until further notice (Affected Contracts); and (ii) defer delivery of all physically settled Nickel Contracts due for delivery on 9 March 2022 and any subsequent Prompt Date in relation to which delivery is not practicable (as determined by the LME and notified to the market) owing to a trading suspension in line with the process in this Notice.
LME Clear has also changed its SPAN margin parameters starting today.