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Stainless Espresso: Nickel manipulation and rising stainless steel prices
Stainless Espresso: Nickel manipulation and rising stainless steel prices

18 March 2022 – There are increasing voices that the owners of the London Metal Exchange (LME) have only intervened in nickel trading to save themselves and certain parts of their cronies. Real trading does not seem to be taking place on the LME with regard to nickel. SHFE currently shows a more “real” price. And all over the world, steel and stainless steel prices continue to rise. Peak season is coming.

Nickel manipulations: London Metal Exchange so far without real trading

After the London Metal Exchange (LME) had suspended trading in nickel on 8 March and started an attempt to restart trading in the important metal on 16 March 2022, there has apparently been no real trading in nickel so far.

LME intervention in trading spooks traders

The LME’s apparent intervention in nickel trading, behind which the investment bank JPMorgan seems to be “hiding”, has apparently scared off many traders. Some even claim that the LME, HKEX and JPMorgan are currently just trying to save their premium cronies.

Connection between LME, HKEX and JPMorgan

Why JPMorgan of all companies? JPMorgan owns shares through several of its own companies not only in the London Metal Exchange, but also in the Chinese Hong Kong Exchange, which has been the main shareholder of the LME since 2012. At the same time, according to unanimous media reports, JPMorgan generously co-financed the nickel speculations of the Tsingshan Group and in the end probably triggered the current chaos on the nickel market.

Several investigations against JPMorgan

This is not the first time that JPMorgan has been confronted with accusations of inappropriate intervention in commodity trading. Even the US Senate has taken up the matter of the investment bank and its speculative transactions.

SHFE nickel already back above March 7 level

At the same time, nickel prices on the Shanghai Future Exchange (SHFE) show that the price limit for nickel seems to have been reached. On the SHFE, for example, the ni2204 contract is already more than 4% higher than on 7 March 2022.

Artificial corrections on the LME

The artificial corrections on the LME (-5% on 16 March, -8% on 17 March, -12% on 18 March and probably -15% on the coming 21 March), and also the strange price jump to $48,000 per tonne (which then surprisingly hardly moved for several days) after the closing price for 7 March was set at $42,200, are obviously aimed at adjusting prices on the LME to the conditions before the failed speculation.

When will the regulators intervene?

The question that the financial regulators will have to ask themselves in the end is whether this was not insider trading for the benefit of the LME cronies. And attempts are currently being made to save precisely this special premium cronies from bankruptcy. Also, the LME and the HKEX will certainly retain the bad taste for a long time that their own shareholders, such as JPMorgan, are involved in their own commodity market.

Steel and stainless steel prices on the rise

Rising steel and stainless steel prices are currently being reported all over the world. In China, spot prices for stainless steel continue to rise. Also from Taiwan price increases of 5.83% on average for the next quarter are reported. Prices for flat and long steel are also expected to rise by up to 20% in the Americas from April 2022.

At the same time, prices for steel and stainless steel in Europe are shooting up. Since the beginning of March, prices in Europe have risen by up to 40% for HRC, for example.

It is time to consider alternatives, especially in view of the upcoming peak season and the global need to replenish steel and stainless steel stocks. Also in view of the new EU anti-subsidy duties on Indian and Indonesian stainless steel.

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