Now Nickel Goes Bananas, Spikes 73% in One Day, on Russia Sanctions, Shipping Chaos, Massive Short Squeeze

Why is someone still short of these metals?

By Wolf Richter for WOLF STREET.

The price of nickel futures today rose more than 93% intraday from Friday’s close to just over $56,000 per metric ton at the all-time high, then s It’s calmed down a bit and currently sits at $50,271 per metric ton, up 73% in one day on the London Metal Exchange, the biggest spike in futures history in 35 years.

Nickel has already jumped 19% in the past week as futures speculators reacted to sanctions that prompted banks and metal suppliers to cut exposure to Russia, and shipping lines shunned Russian ports .

Russia is a major nickel producer, supplying around 6% of global demand, according to Bloomberg. More than 70% of nickel production is used in stainless steel. And 7% goes to electric vehicle batteries, where demand is growing by leaps and bounds. But the batteries of electric vehicles use very pure “class 1” nickel, of which the Russian MMC Norilsk Nickel PJSC produces 17% of the supply.

“Liquidity deteriorated dramatically in the nickel market overnight as sellers rushed to the sidelines, leading to sharp price increases between trades as holders of short positions rushed to buy back positions,” Bloomberg reported.

Which raises another rhetorical question: why would anyone at this time still be short of one of the metals that Russia produces with all this chaos going on?

“Additionally, bullish investors in China are piling up nickel on the Shanghai Futures Exchange,” Bloomberg said, citing Wang Yanqing, an analyst at China Futures Co.

The previous high of $51,800 per metric ton was reached in April 2007, during the mother of all nickel peaks, when the price fell from $10,000 per metric ton in October 2005 to $51,800 in April 2007 , then fell back below $8,000 in December 2008. These commodity price spikes are madness. And they can go crazy for months, but they can’t last long, as the 2007 episode showed.

Other commodities have also become bananas, but to a lesser extent today, including wheat in reaction to the chaos around supply from Ukraine and Russia, and of course crude oil where WTI futures rallied and briefly hit $130 overnight, before stabilizing a bit. .

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This stock market is coming stock by stock. The chaos that totally crushed one stock after another for a year bursts to the surface

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