LME Nickel

LME Nickel stands for a group of spot, forward, and Futures contracts, trading on the London Metal Exchange (LME), for delivery of primary Nickel that can be used for price hedging, physical delivery of sales or purchases, investment, and speculation.

The market remained shut down for more than a week, reopening on 16 March, only to shutdown again when it quickly hit the price decline limit of 5 percent.

The turmoil began two weeks after the Russian invasion of Ukraine and some see Russia's large nickel exports as a related cause.

In the several months leading to March 2022, Xiang Guangda began taking a large short position in nickel through Tsingshan Group, in order to hedge against falling prices.

The price of nickel at the exchange increased by more than 100 percent, reaching over US$100,000 per tonne before LME trading was suspended.

[8][9][10] Since traders cannot exit their long positions in nickel with the LME shut down, some analysts have pointed out that this, while legal, has created "another example of a breach of social contract between the exchanges and investors, and further widens the gap between trust and mistrust.

The contracts prices are quoted in US dollars per tonne, but can also be settled or cleared in Japanese Yen, UK Sterling, and the Euro.

Carry trades involving Nickel futures also have reduced minimum tick sizes at $0.01 per tonne.

[13] LME Nickel futures contract prices serves as a platform for Nickel price discovery because futures markets are more publicly visible and more accessible, due to lower transaction costs, for a larger number of buyers and sellers than the cash market.

Its weighting in these commodity indices give LME Nickel prices non-trivial influence on returns on a wide range of investment funds and portfolios.

However, China does not allow warehouses in its territory to become LME-registered, and metal for Chinese delivery is typically shipped from Singapore or South Korea.