LME three-month nickel drops 12%, hits limit down

Benchmark nickel on the London Metal Exchange slid 12% to hit limit down in opening trading on Friday, the third straight day the metal has hit its lower price limit.

The metal used to make stainless steel and electric vehicle batteries fell to $36,915 a tonne when it opened on the LME.

Volumes were scant, with only 103 lots traded by 0815 GMT, with few buyers willing to pay the current price, since it is still above the price on the Shanghai Futures Exchange, traders said.

Shanghai’s April contract traded at 219,620 yuan, or $34,566 a tonne.

The LME suspended nickel trading on Tuesday last week after prices spiked by more than 50% to over $100,000 a tonne, and it resumed trading on Wednesday with an adjusted starting price of under $48,000 and a limited trading range of 5% either side.

The price limit was increased to 8% beginning Thursday and 12% for Friday.

The exchange’s electronic system LMEselect has been hit by technical glitches since it has reopened with some traders unable to enter nickel orders ahead of the open at 0800 GMT.

An industry source said a few trades slipped below the price limit on Friday, which will be cancelled, but it did not cause the LME to stop trading as had been the case on Wednesday and Thursday.

LME nickel prices are used as a reference for deals between end users of the metal and producers, and the disorderly market resumption left some traders questioning whether participants might look for alternative venues.

The rapid rise in prices caught out some large players who were betting on a decline in nickel. To cut their positions and limit their losses, they bought large amounts of the metal last week, triggering the spike above $100,000 a tonne.