LONDON – The London Metal Exchange (LME) should keep nickel trading suspended until price stability can be guaranteed, the European Steel Association (Eurofer) said on Wednesday, a day after nickel prices doubled in a matter of hours.
The LME and Britain’s financial watchdog, the Financial Conduct Authority, should take necessary action to “resolve the massive, artificial fluctuations in nickel prices,” the industry group said in a statement.
The LME was forced to halt nickel trading and cancel trades after prices soared on Tuesday to more than $100,000 per tonne in a surge that sources blamed on short covering by one of the world’s top producers.
About 70% of nickel is used as a key ingredient to make stainless steel.
“We have seen an unprecedented surge in nickel prices that cannot be explained by supply and demand, nor by the sanctions recently imposed on Russia,” said Eurofer Director General Axel Eggert.
Eurofer called for a probe into trading practices by some market players to determine whether they constitute market abuse or the creation of a disorderly market.
The group also asked for transparency on moves by market participants exceeding regular participation and trading limits.
Europe produces about 160 million tonnes of steel a year at about 500 production sites.