Nickel market price… Nickel futures (ton price) rose from 20 thousand to 100 thousand in 2 days in London stock exchanges. Ukraine and Russia failed to make any progress in stopping the war. Therefore, commodity price action is very likely to remain vibrant.
LME nickel price and open interest… Source: Bloomberg, London Metal Exchange
Nickel market… Nickel is used in electric battery motors. This may put the automotive industry in a difficult position. For this reason, it directly concerns branches such as iron-steel and automotive in the sectoral sense. Russia provides 10% of nickel production. We will experience many restrictions in the supply of goods as the risks of war disrupt the production network. Industrial demand may cause substitutes to be sought in dominant markets outside of Russia. Indonesia and the Philippines, which are sanction-free markets, come to the fore ahead of Russia in world nickel production.
Short squeeze… Nickel producer Tsingshan is thought to have lost about $2 billion due to Xiang Guangda's nickel open positions on the London Metal Exchange. While it is a good move to take a reasonable short position in order not to incur losses in the possible declines in nickel prices, it was a problem to catch a large amount of open positions.
Nickel Mines' share price also continues to decline amid global fluctuations in nickel markets. The stock has suffered heavy losses due to its ties to the world's largest stainless steel producer, which is thought to be behind nickel's first-ever rise to $100,000.
Conclusion? Sanctions on Russian exports are also making commodity traders assess their next move and position themselves for volatility. LME nickel transactions will not open until March 11. Tsingshan and its subsidiary were recently caught holding an enormous short position in nickel futures, and these positions and speculative profit motivation have clearly backfired over the past few days. Of course, the worst part of being caught in a short position is that the position ceases to be hedged and turns into speculative. The market risk was realized and the rise in prices with the war position brought a serious upside.
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