Nickel has long had a reputation as the most volatile base metal, but its biggest daily jump in a decade has left even the most seasoned traders astonished.
The metal spiked as much as 13 per cent, or almost US$2,000 a ton, in thin Asian morning trading, extending a rally over the past month triggered by rumours that top producer Indonesia might bring forward a ban on nickel ore exports. Prices eased after the nation’s mining ministry denied that any policy changes are imminent, but were still up a hefty amount as London trading opened.
“You can see that the market is barely trading now because people just don’t know what to do,” said George Daniel, a hedge fund manager at Red Kite who’s been trading metals since 1993. “It could come off from here, but everyone’s just waiting to see if China comes in and buys it again.”
Nickel has in recent years become one of the most actively traded contracts on the London Metal Exchange, as short-term investors have been drawn to its sharp price moves. Trend-following funds have added fuel to the recent rally, as have options traders who were forced to hedge their exposure as prices started surging late Wednesday, Daniel said.
Nickel touched US$16,690, the highest since April 2018, and was last up 4.8 per cent at US$15,525 on the LME. Shanghai Futures Exchange contracts surged by the daily limit, reaching the highest since trading began in 2015.
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