Large share of Russian exports and unwinding of large short position lead to massive rally on nickel market
NICKEL continues to be one of the most volatile commodities. Price of this industrial metal briefly traded above $100,000 per tonne at the Singapore exchange during Asian session today. To put this figure into perspective let's recall that NICKEL traded at around $20,000 per tonne in January! Price jumped above $50,000 yesterday. Nickel started today's trading in London (London's Metal Exchange) slightly above $80,000. What are reasons behind the rally?
A unit of one of the largest Chinese banks - China Construction Bank Corporation - faced a margin call worth hundreds of million of USD. The unit had a large short position on nickel and suffered massive losses following yesterday's spike in nickel prices. Margin call was due to be settled on Monday but as the Bank did not have sufficient funds, LME prolonged the deadline until today. Apart from that, LME has halted deliveries of some commodities, including nickel, what led to a temporary deficit of the commodity for trading. Nickel is used primarily in steel production but it is becoming more and more important as a crucial commodity in EV batteries. What's more, Russia accounts for almost 30% of global raw nickel exports and also accounts for 17% of top-grade nickel production. War in Ukraine creates the risk that Russian supply will become unavailable due to sanctions. Meanwhile, nickel stockpiles at global exchanges sit at low levels.
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NICKEL launched today's trading in London above $80,000 per tonne - 60% higher than yesterday's close and over 200% above week-ago price. Source: xStation5
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