March SHFE nickel contracts fell as much as 7.2% to 236,000 yuan ($37,352) per tonne while metal for August delivery slumped by the daily limit to 211,500 yuan (33,472) a tonne.
BMO Capital Markets in a note argues that this week’s move is “purely financial” and there are knock on effects from the LME’s market structure that upended trading in in the stainless steel and EV battery ingredient:
“Such volatility forces additional collateral to be posted by short position holders, which for funds may mean selling positions in other commodities while for producers this may strain treasury balances.
“We see limited risk this happens with other metals, which are naturally larger and more liquid than nickel, and with less evidence of extended short positions.”
It was the squeeze on Tsingshan’s massive short position which ballooned to $8 billion on paper that lit the nickel price on fire this week and while the world’s…
