Nickel traders were plunged into more chaos this morning as the London Metal Exchange was forced to suspend trading again after further systems failures.
The start of the second day of trading after a week long suspension of the market was postponed after a series of technical glitches, including trades at the newly implemented price being rejected and cancelled.
The exchange set out new price limits to prevent a repeat of the turmoil of last week when it was forced to shutter the market on the back of a price spike which left traders nursing record losses.
A glitch yesterday forced the exchange to suspend reopening again until 2pm, after the price limits failed and trades were allowed to go through below the limit.
The benchmark three-month nickel contract plunged eight per cent this morning after the market was finally reopened, as heavy selling continued.
Boris Ivanov, founder of commodities firm Emiral Resources said the drop in prices this morning showed that the market was beginning to settle.
“As nickel has already fallen by the new five per cent daily limit set by the LME, the chaos caused by the short squeeze last week looks to be easing. The drop will also help ease the gap between nickel contracts on the Shanghai Futures Exchange,” he said.
“It’s unknown just how long it will take for the market to rebalance. Regular market participants are likely to remain cautious and investors looking to unwind positions in nickel should expect to do so against volatile global markets.”
Nickel prices have faced extreme volatility, with prices more than doubling in a matter of hours last Tuesday when Chinese firm Tsingshan Holdings scrambled to buy up huge amounts of the metal to cover its short bets.
London Metal exchange then suspended trading entirely and cancelled the entire day’s trades, worth $3.9bn.
Tsingshan, one of the world’s largest largest producers of nickel is now facing around $8bn losses.
The boss of the London Metal Exchange told CNBC yesterday that it had “deliberately prioritised stability” by setting narrow price limits, and it would widen them if it observed an orderly market.
Russia supplies about 20 per cent of the world’s class 1 nickel, and prices have been sent into a spin on the back of supply fears after sanctions have been slapped on Russia following the invasion of Ukraine.