The latest spike comes as customers with short positions were barred from trades, said a nickel trader involved in the trades. Clients such as industrial hedgers have been hit by large intraday margin calls as prices surged this week on fears of supply disruptions from Russia, and they are now being forced to liquidate their positions. in an increasingly illiquid market, the person said.
Global commodity markets, from metals to crops to energy, have been disrupted by Russia’s invasion of Ukraine, major corporations pulling out of the country, lenders pulling out of financing deals and the threat of new penalties is deterring buyers. It is also becoming increasingly difficult to transport goods such as metals, which are shipped in containers.
Russia is a key supplier of nickel, and the threat to supplies comes at a time when global stocks are already low and continuing to fall. Freely available nickel stocks on the exchange fell to the lowest since December 2019, with two dominant parties holding the warrants, according to LME data. Spot nickel contracts traded at the highest premium to three-month futures since 2007 on the LME, in a condition known as a pullback that signals a deepening supply squeeze at the LME. cash.
(By Mark Burton and Yvonne Yue Li)