Is the Nickel Market Broken?

What’s nickel worth?

Russia’s invasion of Ukraine has shaken many markets, perhaps none as severely as trading in nickel. The chaos is causing supply problems for carmakers and others that need the metal — and raising fundamental questions about how commodity markets work.

The global nickel market is basically frozen, The Times’s Jack Ewing and DealBook’s Stephen Gandel report. After a surge in prices last week, trading was suspended for several days, and has struggled to function under new restrictions. Today, for the third time in three days, a plunge in price at the open of trading almost immediately triggered the exchange’s daily limit, below which no further trades are allowed. “The market is broken,” said Keith Wildie, the head of trading at Romco, a metals firm based in London.

Nickel users are trying to shield themselves from future shocks. Volkswagen, for example, is considering buying directly from mining companies. Nickel is a key component in batteries for electric vehicles, and volatile prices could slow the transition away from fossil fuels.

A quick recap: Early last week, nickel’s price more than doubled in a matter of minutes. A large producer, Tsingshan of China, had bet that nickel’s price would drop — a wager that went awry when Russia’s invasion of Ukraine threatened to disrupt already tight supplies. The rapid rise in price threatened Tsingshan and others with huge margin calls, prompting the London Metal Exchange to halt trading and cancel trades made at the highest prices during the frenzy. Since then, attempts to restart trading and allow the market to settle on a price for nickel have faltered. Analysts expect nickel prices to drop, eventually, but to remain significantly higher than they were a year ago.