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LME
BusinessBanking & Finance

LME nickel mayhem: London’s trading stops as soon as it begins as new daily price limit throws metal exchange into chaos, again

  • Surge in nickel prices, margin calls prompted LME to suspend nickel trading last week
  • Tsingshan Holding Group, world’s largest nickel producer, facing US$3 billion in losses over prior margin calls

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Traders operating in the Ring, the open trading floor of the new London Metal Exchange (LME) on February 18, 2016. Photo: AFP
Chad Bray
The London Metal Exchange (LME) temporarily suspended electronic trading of nickel just minutes into its session early on Wednesday, a week after a surge in prices spurred billions of dollars in margin calls and forced the Hong Kong Exchanges & Clearing (HKEX)-owned bourse to suspend trading of the commodity for the second time in its history.

The 145-year-old bourse reopened for electronic trading after 2pm GMT, but only saw limited trades in another chaotic day in the nickel market.

The LME set a limit of 5 per cent above or below the last closing price for nickel following last week’s mayhem, with the nickel price hitting that threshold in just over a minute after opening on Wednesday.

However, some trades on its LMEselect system were allowed to go through below the limit because of a technical issue prompting the exchange to suspend trading on the electronic system and cancelling a “small number” of those trades, the LME said.

The price of a three-month nickel contract stood at US$48,078 before last week’s trading halt, a 66 per cent jump in the metal’s price.

While electronic trading was closed, inter-office telephone trades and nickel trading in the LME’s open-outcry ring in London continued unaffected on Wednesday.

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