Nickel futures are not trading anywhere in the world on Wednesday, after prices in Shanghai hit their daily upward limit in the wake of unprecedented moves and a trading suspension on the London Metal Exchange.
Overnight trading of the metal on the Shanghai Futures Exchange -- China’s top commodities bourse -- saw prices surge 17% to the daily limit of ¥267,700 (US$42,373). That means there will not be any more trades during the current session, which ends at 3pm local time, unless transactions are concluded below that price.
It is a remarkably calm moment in the world of nickel trading after a tumultuous start to the week saw prices rocket as much 250% in two days on the LME. The unprecedented rally prompted the 145-year-old exchange to suspend nickel trading on Tuesday -- with a resumption unlikely before Friday.
Nickel’s dramatic surge was powered by a squeeze that forced giant producer Tsingshan Holding Group Co. and its brokers to liquidate some short positions built up over the course of months.
Unlike the LME, commodity futures in China are subject to caps on daily price swings to avoid big surges in volatility. Nickel soared to SHFE’s daily limit on Monday and Tuesday, before Wednesday’s halt. The bourse also hiked transaction fees for nickel and other commodities, another move to calm the market.
The LME -- which does not usually impose limits on intraday trading -- said nickel’s moves would be capped at 10% after it restarts, and expects to open trading in European hours only to begin with. The metal surged as much as 110% on Tuesday, the most ever, though the exchange later announced it would cancel all trades that took place in the hours before the halt.