LONDON- The London Metal Exchange’s (LME) benchmark nickel contract fell again on Tuesday but for the first time since resuming trade on March 16 the contract didn’t hit its downside limit and metal was changing hands.
The pick-up in activity suggests the market is starting to return to normal after two weeks of chaos in which the world’s most important nickel trading venue endured a price surge followed by a six-day trading suspension and a problematic restart hit by technical glitches.
LME three-month nickel tumbled as much as 13.9 percent to $27,020 a ton just after Tuesday’s market open before hitting around $28,800, down 8 percent.
The exchange suspended nickel trading on March 8 after a Chinese company, Tsingshan Holding Group, bought large amounts to reduce short bets, pushing prices up by more than 50 percent in a few hours to over $100,000 a ton.
Trading of the metal used in stainless steel and electric vehicle batteries resumed on March 16 with an adjusted starting price of under $48,000 and a daily down limit that started at 5 percent and was later increased to 15 percent.
Trading has hit these limits immediately after the market open each day since, with only a few contracts changing hands.
On Tuesday, around 13,000 contracts representing 78,000 tons of nickel had traded – compared to around 9,000 contracts a day on average between the start of this year and March 8.
Traders had expected prices to fall until they reach the levels on the Shanghai Futures Exchange (ShFE) after an adjustment for costs such as transport, insurance, import duty and other fees. – Reuters
