On Tuesday morning, the London Metal Exchange froze trading on nickel, after prices soared almost 250 percent in just two sessions amid a short squeeze. It also moved to cancel all trades that had occurred before the freeze.
The surge happened as Tsingshan Holding Group Co., the world’s largest nickel producer, moved to close a chunk of its $8 billion short position amassed over months. Nickel prices spiked to an all-time high of $101,365 a tonne, as deliveries fell short and contracts dropped.
BMO Capital Markets argued in a note that the move is “purely financial,” though Tsingshan’s “ability to invest in growth may be limited in the near term, potentially hitting supply forecasts.”
Meanwhile, BMO forecasts that nickel demand will exceed 3 million tonnes this year for the first time ever, propelled by huge growth in EV demand.