More confusion at the end of the first session of the London Metal Exchange nickel contract, with a data glitch, low interest, intense caution and fears of sudden price movements.
Trading was limited to 5% price movements – up and down from a price of $US47,986 a tonne — to stop a repeat of the previous huge surge in the nickel price to more than $101,000 a tonne and then the equally big drop to around $US48,000 a tonne.
The price fell to the 5% lower limit and remained there but after the session had ended, the LME upped the limits for nickel to 8% (its 15% for other metals like copper).
Earlier LME explained it had been forced to halt the nickel market once again after a “systems error” allowed a small number of trades to go through below its newly imposed daily price limit.
The LME said those trades executed below the lower daily price limit would be cancelled.
It was another embarrassing setback for the LME after the previous week’s trading suspension debacle.
The LME resumed nickel trading contracts at 8am London time after extreme price volatility prompted a rare market shut down last week. Trading reopened at 2 p.m. London time and the price closed limit down.
By 4.30pm, the LME’s three-month nickel contract had traded just 249 lots, or 1,494 tonnes, the slowest day since November 2006. There was no clearly indicated closing price except the adjusted previous closing price of $US47,986 a tonne.
On March 7, (the day before the suspension) 26,150 lots, or 156,900 tonnes, changed hands.
In the LME’s official outcry session on Wednesday, which is conducted with hand gestures in a trading ring in London, prices also hit the lower limit when electronic trading resumed at 2pm.
The bearish sentiment towards nickel was reinforced by a Wednesday report from the state-backed Shanghai Securities News that Tsingshan holdings (the Chinese company that triggered the suspension of LME trading) had agreed with two companies to swap its nickel with a purer form of the metal to close out its large LME positions.
“LME nickel is on its own, completely dislocated from the rest of the world,” Saxo Bank analyst Ole Hansen told CNBC. “For now, let’s say Shanghai nickel is the global market because at least it is trading.”
Shanghai nickel closed at $US37,000 a tonne on Wednesday evening.
