London Metal Exchange suspends nickel trading amid rising oil prices

• The exchange was considering a ‘multiday closure’ of the nickel market

• Traders attributed the steep rise in nickel to a short squeeze

The London Metal Exchange (LME) suspended trading in its nickel market, on Tuesday, after the three-month price briefly soared above $100,000 per metric ton, more than double the previous day’s price.

The LME said in a statement that the evolving situation in Russia and Ukraine had affected the nickel market. The exchange was considering a “multiday closure” of the nickel market, “given the geopolitical situation which underlies recent price moves.” 

Also read: Gold price jumps to $2000 per ounce as investors shifting to safe-haven assets

On Tuesday, nickel last traded at $80,000 but the LME canceled all trades from the morning before the trading suspension.

Russia is an important source of nickel, which is used to make steel and electric car batteries. Nickel closed at $48,078 on Monday rising by 66% as compared to its price on Friday.

Traders attributed the steep rise in nickel to a "short squeeze," which is when a borrowed asset is sold at a discount. The trader is usually expecting the price to fall when they do this but are forced to buy the asset at a loss due to a jump in price.

Oil and gas prices surged again on Tuesday after President Biden announced a ban on Russian oil and natural gas imports, a move that could increase gasoline prices that have already climbed to record highs.

Britain said it would phase out imports of Russian oil by the end of the year while the EU outlined a proposal to make itself independent of that supply in the coming years.

Read more: UK to phase out Russian oil imports by end of 2022