Markets

Nickel falls 12% to hit limit down again on London Metal Exchange

Key Points
  • The price hit $36,915 a metric ton as it opened for trade, according to Refinitiv data.
  • The 145-year-old exchange, which still has some open outcry trading, has had a wild two weeks with price surges, technical glitches and trading suspensions.
  • The LME installed a trading range of 5% on Wednesday which was widened to 8% for Thursday, and then 12% for Friday.
Traders, brokers and clerks on the trading floor of the open outcry pit at the London Metal Exchange in London, U.K., on Monday, Feb. 28, 2022.
Chris J. Ratcliffe | Bloomberg | Getty Images

LONDON — The benchmark three-month nickel contract fell 12% on Friday morning to hit a new trading limit, as heavy selling continued on international metal markets.

The price hit $36,915 a metric ton as it opened for trade, according to Refinitiv data. The 145-year-old exchange, which still has some open outcry trading, has had a wild two weeks with price surges, technical glitches and trading suspensions.

On March 8, nickel prices more than doubled in a matter of hours, climbing above $100,000 a metric ton as one of the world's top producers, China's Tsingshan Holding Group, bought large amounts to reduce its short bets on the metal. Trading had to be halted as the move exacerbated a price rally at a time when metals were already spiraling upward on Russia's intensifying conflict in Ukraine.

Then on Wednesday, the LME attempted to resume nickel trading after the rare shut down. But a "systems error" allowed a small number of trades to go through below the newly imposed daily price limit, and the exchange was temporarily halted once again.

The LME installed a trading range of 5% on Wednesday which was widened to 8% for Thursday, and then 12% for Friday.

Speaking before the open on Wednesday, Matthew Chamberlain, CEO of the LME, told CNBC's "Squawk Box Europe" that the exchange was "absolutely mindful of the impact that this has had on so many people and we need to make sure that it doesn't happen again."

VIDEO2:5602:56
LME CEO on nickel trading shutdown: 'We cannot be in a position where this happens again'

Chamberlain said the LME had "deliberately prioritized stability" by setting a relatively narrow range of daily trading limits, but these could soon be widened if the exchange observed a "more orderly market."

Commodity prices have jumped on supply fears related to Russia's onslaught of Ukraine, with the ongoing war and an array of Western sanctions raising disruption fears. Alongside energy, Russia is a key producer and exporter of metals and grains. Indeed, Russia is the world's third-largest producer of nickel — a key ingredient in stainless steel and a major component in lithium-ion batteries.

—CNBC's Sam Meredith contributed to this article.