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Breaking News: Suspension of LME Nickel Market
Breaking News: Suspension of LME Nickel Market

8 March 2022 – Trading on the LME nickel market has currently been suspended due to the Ukraine-Russia conflict and the subsequent sharp rise in prices in the night from 7 to 8 March 2022. The situation is currently being assessed by the LME and the special committee. As soon as the LME has come to an assessment of the situation and has decided on concrete measures, it will announce how nickel trading will be continued and when the suspension of LME nickel market will end.


From the announcement of the LME, 8 March 2022: (Source)

SUSPENSION OF LME NICKEL MARKET

Summary

  1. Following further unprecedented overnight increases in the 3 month nickel price, the LME has made the decision to suspend trading for, at minimum, the remainder of today (Tuesday 8 March 2022).

Background

  1. The LME, in close discussion with the Special Committee, has been monitoring the LME market and the effect of the evolving situation in Russia and Ukraine. It is evident that this has affected the nickel market in particular, and given price moves in Asian hours this morning, the LME has taken this decision on orderly market grounds.

Defined Terms

  1. Defined terms used in this Notice shall have the meaning ascribed to them in the LME Rulebook or the Rules and Procedures of LME Clear, as applicable, unless otherwise defined in this Notice.

Actions

  1. Trading of the LME Nickel contract on all venues of the LME market will be suspended as of 0815 (London time) on 8 March 2022.
  2. Trading will be disabled in LMEselect, and nickel trading will not be permitted on the Ring. Additionally, inter-office trades should not be booked for nickel after this time.
  3. Margin on the LME Nickel contract will, for the present time, be calculated on the basis of Closing Prices on 7 March 2022. LME Clear will consider what additional measures, if any, should be taken
    from a risk management perspective.
  4. The LME’s other contracts will continue to trade as normal, but will be closely monitored.

Next steps

  1. The LME will actively plan for the reopening of the nickel market, and will announce the mechanics of this to the market as soon as possible. The LME will give consideration to a possible multi-day closure, given the geopolitical situation which underlies recent price moves. In this context, the LME will also make arrangements to deal with upcoming deliveries.
  2. The Exchange will further consider whether trades booked prior to 0815 today should be subject to reversal or adjustment, and will again update the market as soon as possible.

Full LME notice 22/052 for further details.


From the LME update, 8 March 2022: (Source)

NICKEL SUSPENSION – FURTHER INFORMATION: DELIVERY DEFERRAL AND TRADE CANCELLATION

Summary

  1. The LME has been monitoring the impact on the LME market of the situation in Russia and the Ukraine, as well as the recent low-stock environment and high pricing volatility environment observed in various LME base metals and in particular Nickel. With immediate effect, and following the suspension of the LME Nickel market announced in Notice 22/052, the LME (acting where required through the Special Committee) has determined that it is appropriate in the circumstances to take the following actions in respect of physically settled Nickel Contracts: (i) cancel all trades executed on or after 00:00 UK time on 8 March 2022 in the inter-office market and on LMEselect until further notice (Affected Contracts); and (ii) defer delivery of all physically settled Nickel Contracts due for delivery on 9 March 2022 and any subsequent Prompt Date in relation to which delivery is not practicable (as determined by the LME and notified to the market) owing to a trading suspension in line with the process in this Notice.

Background

  1. The current events are unprecedented. The LME is committed to working with market participants to ensure the continued orderly functioning of the market. The suspension of the Nickel market has created a number of issues for market participants which need to be addressed. This Notice is intended to address the most pressing of those issues. Further communications will be issued during the course of today, including regarding the process for reopening the market.

Cancellation of Affected Contracts

  1. The LME hereby exercises its powers to cancel all Affected Contracts. Members with Affected Contracts will be contacted by the LME with instructions to cancel or reverse these Affected Contracts. LME Post-Trade Operations will create files containing all the details of the trades that Members will need to book to effect these cancellations / reversals. These files will be emailed to Members.

Full LME notice 23/052 for further details.


If there is any new information about the suspension of the LME nickel market, we will of course inform you.

Background: Nickel jumps to over $100,000 per tonne

The LMEselect 3 Month Nickel briefly jumped above $100,000 per ton tonight and currently ranks at around $80,000 per ton. The LME Nickel c1 started today’s trading at around $81,000 per ton. This means that nickel prices have clearly left the all-time high from 2008 behind them and, even if only briefly, have easily jumped by 100%. This increase ultimately led to the suspension of the LME nickel market.

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