Nickel prices skyrocketed to a record $101,365 per ton on Tuesday due to Russian output concerns as the Ukraine conflict rattles commodity markets.
The metal, which is used to make stainless steel and batteries for electric vehicles, briefly traded at $101,365 per ton, nearly double its 2007 peak. It later eased to $82,195.
Russia's invasion of Ukraine and Western sanctions against Moscow have caused turmoil in the markets, sending the prices of everything from oil to gas to aluminum to wheat soaring, while equities have fallen.
Russia is the world's third biggest producer of nickel, noted Benjamin Louvet, the analyst at OFI Asset Management.
"For now, the main producers of metals in the country have been spared by sanctions, but many companies in this sector are headed by oligarchs close to Vladimir Putin," Louvet said.
"The impact of such sanctions could be significant, as 37% of Russian exports go to the Netherlands and 16% to Germany," he said.
London suspends nickel trade after record spike
The London Metal Exchange (LME) on Tuesday has suspended trade in nickel after the base metal spiked to the record peak.
"Following further unprecedented overnight increases in the three-month nickel price, the LME has decided to suspend trading for, at minimum, the remainder of today," it said in a statement.
London nickel prices more than doubled to cross the $100,000-a-ton level for the first time ever, as tension in eastern Europe showed no signs of cooling and growing sanctions against Russia fueled fears of a disruption in supply. Three-month nickel on the London Metal Exchange soared 71% to $82,250 a ton by 7:55 a.m. GMT. Earlier in the session, the prices shot up nearly 111%, to a record $101,365.
"Fear of shortages is triggering panic buying," said Vijay L Bhambwani, head of research at Mumbai-based Equitymaster.
Russia supplies the world with about 10% of its nickel needs, mainly for use in stainless steel and electric vehicle batteries.
"As sanctions against the Russians got rolled out last week with unprecedented speed, investors found themselves stripping away all Russian output from their supply and demand projections and marking up prices accordingly," ED&F Man Capital Markets analyst Edward Meir said in a note.
Western nations put sanctions on Moscow to isolate it from global commerce and are now considering a ban on Russian oil imports, news of which drove crude prices to a 14-year high on Monday. Logistics disruptions have also roiled commodity markets.
Inventories of nickel in LME-registered warehouses stand at 76,830 tons, their lowest since 2019.
"I think the market will cool off ... There's a lot of supply increase coming in 2022," said Steven Brown, an independent consultant based in Australia.
That would include a lot of new nickel matte production from Indonesia to drive prices lower near the end of 2022, he added.
Prices of other industrial metals also jumped, with benchmark zinc and tin on the LME rising to record highs of $4,896 a ton and $51,000 a ton, respectively.
Fundamentals
* LME copper rose 2.5% to $10,542.5 a ton, aluminum jumped 3.9% to $3,886, lead gained 8.2% to $2,663, zinc surged 9.1% to $4,486 and tin was 7% higher at $50,000.
* The most-traded April copper contract on the Shanghai Futures Exchange ended daytime trading down 0.5% at 74,000 yuan ($11,716.28) a ton, having earlier hit a peak since May 2021.
* ShFE aluminum dropped 3% to 23,105 yuan, zinc gained 7% to 28,195 yuan, lead rose 2% to 15,970 yuan and tin climbed 12% to 391,400 yuan. Nickel hit a limit of 15%, having touched a record high of 228,810 yuan a ton in early trade.
* China's Wuxi Stainless Steel Exchange Center has halted trading for nickel products from March 8 pending further notice and raised trading limits for both stainless steel products and nickel since settlement on March 7.
* The LME is imposing a backwardation limit and delivery deferral mechanism for physically settled base metals contracts with immediate effect, it said on Monday, citing the Russia-Ukraine conflict and tightness in the market.