Nickel Surges Over 111% Intraday... Breaks $100,000 per Ton, Hits All-Time High

[Asia Economy Reporter Hyunwoo Lee] Nickel prices surged more than 110% intraday to reach an all-time high amid the aftermath of Russia's invasion of Ukraine and competitive spot buying by major institutional investors.

According to Bloomberg on the 8th, nickel prices on the LME surged 111% intraday the previous day, soaring to a record high of $101,365 per ton. The price spike was driven by concerns that the nickel supply would be disrupted due to Russia's invasion of Ukraine, compounded by a short squeeze (a situation where short sellers are forced to buy the asset to cut losses).

The sharp rise in spot nickel prices led institutional investors who had short positions in nickel futures to competitively buy spot nickel (short covering) to secure the physical metal needed to fulfill their contracts. After the market calmed somewhat, the surge eased and nickel closed the day up 66% at $48,078 per ton.

Amid the market turmoil, CCBI Global Markets, a subsidiary of China Construction Bank, reportedly received a margin call. Industry clients of CCBI Global Markets failed to provide additional collateral to CCBI, resulting in CCBI Global Markets being unable to pay hundreds of millions of dollars in margin on the day. The LME reportedly extended the deadline for margin payment.

Bloomberg cited sources familiar with the matter saying that because the LME granted a payment extension, CCBI Global Markets has not officially defaulted. Due to the market chaos, the LME also exceptionally allowed the postponement of delivery obligations for all major contracts, including nickel, that afternoon.