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Nickel back on the market at LME

London Metal Exchange (LME) has reopened trading in nickel after more than a week’s lockdown prompted by a doubling in price for three-month nickel virtually overnight.

But the re-opening was marred by another short suspension which LME called ‘a systems error’.

Trading had been halted on 8 March for what the LME described as ‘disorderly’ market activity which took prices over US$ 100 000 per tonne. LME ceo Matthew Chamberlain had told Bloomberg TV that if it hadn’t taken these measures, several brokers would have struggled to survive. The move has divided opinion in the sector with some accusing the LME of being heavy-handed and favouring bearish investors over the bulls.

On 16 March, LME reopened the nickel market at 0800 (with the pre-open starting at 0730).

‘As the market opened, the uncrossing algorithm discovered an opening price of US$ 45 590 (which was the lower daily price limit i.e. 5% below the prices published in Notice 22/067) for three-month Nickel,’ said an LME news release. ‘Unfortunately due to a systems error, LMEselect then allowed a small number of trades to be executed below this lower daily price limit.’

Financial media saw it as another embarrassing twist. A Bloomberg report was headlined:

‘Nickel Reopens Limit-Down in a Shambolic Day of False Starts’ and its energy and commodities columnist Javier Blas tweeted: ‘Bloomberg’s chronicle of today’s reopening of the LME nickel market says it all’.

Bloomberg also reported that a phone-based trading system and the LME’s open-outcry floor were unaffected with prices in ‘the Ring’ dropping by the 5% limit as well.

‘At 2 pm, the exchange restarted electronic trading. But with no-one willing to buy at the limit-down price of US$ 45 590 a tonne, it took over an hour before there were any trades.’

LME also announced that nickel trading on LMEselect will resume at 0800 London time from 17 March 2022. ‘LMEselect will open in a pre-open state at 0730 such that Members can enter orders. While LMEselect has systematic controls against orders being entered which would breach price limits (eg a bid above the upper daily price limit or offer below the lower daily price limit) in both the pre-open or open state, it is the responsibility of all Members to ensure that no such orders are submitted.’

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