The day the nickel blazed

Posted Apr 12, 2022, 5:00 PM

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Panic at the London Metal Exchange (LME)! The price of nickel, already on the rise, suddenly soared on the night of March 7, from 30,000 to 100,000 dollars per ton. More than tripled in less than 24 hours and most of the peak took place in 18 minutes! The Anglo-Saxons speak in this case of a market that breaks. Nickel prices have become disconnected from the reality of the markets. They plunge the London stock market into amazement and then turmoil. Traders have never seen this.

Crisis meetings have followed one another at the LME since 5:30 a.m. and at 8:15 a.m. the decision was taken to suspend trading until the market regained its senses. Extremely rare, we also cancel all the transactions of the morning preceding the suspension, that is to say 4 billion dollars of operations. What some traders still do not hear this ear, threatening to take the matter to court.

big shorts

Quickly we discover that the infernal spiral of nickel is due to a massive short sale made on this metal by Xiang Guangda, the boss of the Chinese nickel giant Tsingshan. He bet on the decline of the metal. But at the beginning of March, the invasion of Ukraine by Russia, which is the main producer of Class 1 nickel listed in London, is catching up with him. The metal is trending higher amid sanctions, the Chinese tycoon actually ignited a spark that geopolitics ignited. Tsingshan’s losses are valued at $8 billion.

La Story is a podcast from Les Echos presented by Pierrick Fay. This episode was recorded in April 2022. Editor-in-chief: Clémence Lemaistre. Guests: Etienne Goetz (journalist specializing in raw materials at “Echos”). Directed by: Willy Ganne. Production and publishing manager: Michèle Warnet. Music: Théo Boulenger. Graphic identity: Upian. Photo: iStock. Sounds: BFM TV, “Hold me… where I make a mess! » (1983), Ina, British Pathé, « Le Dîner de cons » (1998), Dimoné & Kursed « It’s nickel ».

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