Since the outbreak of the Russia-Ukraine conflict, commodity prices have soared, and the recent surge in LME nickel prices has earned it the nickname "demon nickel." So, what caused this "demon nickel" to become so volatile? It's primarily due to uncertainty about Russian nickel supply, but also to investor speculation. However, once the hype wore off, LME nickel prices began to plummet.
To prevent further speculation, the LME declared some nickel trading null and void on March 8th, suspending trading until March 16th. Trading was also subject to daily price limits.
Following the surge in LME nickel prices, Indonesia announced plans to increase nickel ore production by up to 400,000 tons this year. The Philippines also announced plans to add 12 metal mines, most of which are nickel mines, this year.
With major nickel-producing countries announcing increased nickel ore production and a decrease in speculation, the "nickel specter" has finally calmed down. Since the opening, LME nickel has hit the lower limit three times in a row. In the previous three trading days, the LME had set price limits for nickel trading at 5%, 8%, and 12%.
Furthermore, on March 18th, after a 12% drop in LME nickel prices, some trades exceeding the lower limit were executed. However, the LME subsequently declared some of the nickel trades on March 18 invalid. Following three consecutive lower limit days, the LME set the upper and lower limits for nickel trading on March 21st at 15%.
Although LME nickel prices have plummeted, they may continue to fall. Goldman Sachs has reportedly been trading nickel outside the LME. Furthermore, Goldman Sachs has hinted at a bearish outlook for LME nickel, predicting prices will reach around $25,000 per ton.
On March 18, the closing price of LME nickel fell below $37,000 per ton, leaving over 30% room to fall from Goldman Sachs's suggested $25,000 per ton.
