The valuable alloy is largely utilised in the fabrication of stainless steel and lithium-ion batteries. Many investors are finding it difficult to maintain their market position due to rising interest rates and the strong strength of the US dollar.
Nickel finished at $22,376.0, indicating that it is gradually rebounding from its slump. Nickel, as one of the most expensive metals traded on the LME, is significantly impacted by currency markets. The valuable alloy is largely utilised in the fabrication of stainless steel and lithium-ion batteries. Many investors are finding it difficult to maintain their market position due to rising interest rates and the strong strength of the US dollar.
Xiang Guangda, founder of Tsingshan, the largest nickel and stainless-steel business, had taken a large, short position in the nickel market. At its peak, the company had a short position of 150,000 tonnes of nickel, which is almost one-eighth of all existing LME contracts. However, the eastern European crisis posed a danger to the global supply chain and revealed a great long position, causing prices to skyrocket.
The price of nickel jumped 250% in only two days, reaching an all-time high of $101,365/metric tonne (mt) in intra-day trade. LME later banned all new transactions and wiped away $3.9 billion in transactions for which it is facing multiple lawsuits.
Tsingshan suffered a significant loss in the nickel squeeze, but they were not entirely incorrect. They were aware that manufacturing would increase, lowering prices but, they entered the short position far too soon, in late 2021. They did not expect the Russian invasion, which triggered global supply chain concerns and caused prices to skyrocket.
Nickel is unlikely to reach its pinnacle of $50,000 very soon. The rise in global nickel supply because of high output from Indonesian mines, which saw a 41% increase in YOY output, will lower the price in the short run. Nickel, like any other metal, will confront the Russian challenge, depending on what the LME decides to do with Russian nickel. Despite the approaching economic worries, long-term demand for nickel appears to be high enough, with Electric Vehicle manufacturing being the key driver.