The London Metal Exchange halted trading in nickel minutes after it restarted today (March 16), citing a technical issue as prices plunged.
Trading in nickel resumed only briefly when the market reopened after a week-long suspension. Trading restarted at 8 a.m. U.K. time and nickel futures immediately fell through the 5% daily window before the market was once again suspended.
The exchange said it halted electronic trading to investigate a technical issue and will cancel a “small number” of transactions as a result. Phone-based trading remains open and brokers on the trading floor, known as “the Ring,” will also continue to trade nickel today.
Only 206 lots, or 1,236 tons of nickel, changed hands before the market stopped trading within seconds. Most of those trades took place at the limit price of $45,590 U.S. a ton. Several trades appeared to be at prices below the 5% limit.
More than 8,600 contracts, or 51,600 tons of nickel, were offered for sale in the electronic order book as the market opened, versus just three contracts bid.
The drop in prices is a sign that last week’s historic short squeeze in nickel is easing. It narrows the gap between nickel contracts on the London Metal Exchange and those on Shanghai Futures Exchange, which have continued trading during the suspension.
Last week’s historic decision to halt trading came after spiraling prices left some brokers scrambling to pay huge margin calls against bearish positions held by top producer Tsingshan Group Holding Co.
The forced halt has been viewed as an embarrassing setback for the 145-year-old metal exchange, which is the world’s main venue for setting prices and trading some of the most important industrial metals.
The electronic-trading issues could end up breathing fresh life into the London Metal Exchange’s trading floor, which has shrunk in importance in recent years. The exchange had tried to close the Ring last year but canceled the plan after a backlash from some of its members.
The London Metal Exchange announced it would reopen the nickel market this week after Tsingshan secured a standstill agreement with its banks. Commodities markets have been hit by a wave of selling since the exchange halted trading to defuse the unprecedented rally that it said posed a systemic threat to its market
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