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Kallanish Steel Weekly: Global stainless sector suffers from nickel price jump, LME trading halt (March 15, 2022)

The London Metal Exchange (LME)  halted on 8 March trading of nickel on all its venues following an unprecedented rise in its three-month nickel contract to over $100,000/tonne. 

Nickel prices had risen 90% to $55,000/t on 7 March, before reaching $101,365/t during night trading into 8 March. This price then dropped to over $80,000/t prior to trading opening, when an LME special committee decided to suspend trading.

The previous historical peak for nickel prices on the LME was $51,800/t in May 2017. Prices on the Shanghai Futures Exchange (SHFE) also rose to all-time highs, opening the day trading at CNY 228,810/t ($36,266/t) on 8 March.

Heightened geopolitical tensions as a result of the war involving the world’s third-largest supplier of nickel are now sending shockwaves through global nickel markets, and consequently, to end-users such as the electric vehicle (EV) and steel industries.

According to Rystad, Russia accounted for nearly 13% of total global nickel mining capacity last year, compared to Indonesia’s 34% and the Philippines’ 15% shares. It produced 283,000t of nickel (metal weight) in 2020, which is 11.27% of global nickel output, the consultancy adds.
Russian nickel miner Nornickel said earlier this week the “geopolitical situation” has not affected its production and sales. The company has pledged to continue its investment plans to expand capacity and meet increased demand coming from the EV industry. It intends to produce 205,000-215,000t of nickel this year, and had previously forecast a mild 42,000t surplus in 2022 – prior to the Russian invasion of Ukraine.

In addition to the uncertainty created by the ongoing war in Ukraine, the market was shaken by the impact of the price surge on some key players in the market, such as Chinese Tsingshan Group, holding long positions on nickel.