Nickel electronic trading halted minutes after it restarted at The London Metal Exchange (‘LME’), citing a technical issue with its new daily limit, as prices plunged when the market opened after a week-long suspension, reported Bloomberg.
What happened: Trading restarted at 8 a.m. GMT and nickel futures immediately fell through the 5% daily window before the market was suspended again.
Related: Nickel Trading To Resume In London With Curbs on Wednesday After Week-Long Halt: Report
As per Bloomberg, the exchange said it halted electronic trading to investigate the problem and cancel a “small number” of transactions. Phone-based trading remains open, and brokers in the open-outcry floor known as “the Ring” will trade nickel later today.
Why it’s Important: The drop in prices signifies that last week’s historic short squeeze is easing, narrowing the gap between nickel contracts on the LME and those on Shanghai Futures Exchange.
The LME announced it would reopen the nickel market this week after Tsingshan secured a standstill agreement with its banks.
Related: JPMorgan In Talks With Tsingshan To Contain Nickel Crisis: WSJ
On Wednesday morning, 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 a ton.
Shanghai Futures Exchange contracts closed up 8.6% at 235,200 yuan ($37,048) a ton but remained below LME prices before the London market opened, Bloomberg notes.
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