The London Metal Exchange, late March 9, said it will permit its members to execute nickel position transfers after the metal's suspension from trading was extended following extreme variability in price.
LME Allows Nickel Position Transfers Amid Suspension
Position transfers can help reduce systemic risk, the London Metal Exchange said, even as nickel remains suspended from trading. “Although nickel is currently suspended from trading, the LME Group appreciates that certain members wish to carry out nickel position transfers,” the exchange said in a statement on its website. “As these position transfers can decompress the system and, as a result, reduce risk, the LME Group considers it appropriate to allow these position transfers to continue.”
However, it added that both the LME and LME Clear retain absolute discretion in approving any specific position transfer requests.
The LME suspended nickel trading on March 8 after prices more than doubled overnight, surging past $100,000/mt and hitting a record of $101,365/mt in early trading, compared to the March 7 close of $48,078/mt. Along with halting live trading, the exchange canceled all nickel trades conducted on the interoffice market and LMEselect from 0000 GMT on March 8 until further notice.
China’s Wuxi Stainless Steel Exchange Center suspended nickel trading on March 8, followed by the Shanghai Futures Exchange on March 9 after prices hit the daily limit for three consecutive days.
To manage position transfers appropriately, the LME said that members can only perform nickel position transfers via its LMEmercury clearing platform. Given the unprecedented market volatility, the LME and LME Clear said they would not charge fees for any nickel transactions made during the suspension period, starting from 0000 UK time on March 8. This waiver includes trade executions, cancellations, and position transfers.
The LME had previously indicated that it did not expect to reopen nickel trading before March 11. “The LME and LME Clear (LME Group) have continued working through the evolving nickel situation, intending to ensure that it is in a position to reopen the market, with trading continuing in an orderly manner, in an appropriate time frame,” it said in a March 9 statement.
Call for Regulatory Action
On March 9, Eurofer — the European Steel Association — urged the LME and the UK’s Financial Conduct Authority to take action against recent “massive” and “artificial” swings in the nickel market. Nickel is a vital input for stainless steel and electric vehicle battery production.
Eurofer called for transparency around any trading activity that might have exceeded normal participation or trading limits. General Secretary Alex Eggert stated that the extraordinary nickel price surge since March 7 could not be justified by market fundamentals or recent sanctions on Russia.
