Aluminum Prices On London Metal Exchange (LME) Soared Amid Fears Of Russian Supply

On Wednesday, London Metal Exchange (LME) aluminum costs hopped as much as 5.2 percent as the escalating war in eastern Europe and new sanctions against Russia, the main supplier, caused logistical problems and challenged to interrupt world supply.

As of 0310 GMT, the three-month price of aluminum on the London Metal Exchange was up 2.3 percent at $3,577.5 per tonne.

Russia, which generates approximately 6 percent of the globe’s aluminum and supplies approximately 10 percent of its nickel requirements, is also a big manufacturer of natural gas, which is utilized to power aluminum manufacturing.

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LME prompted to stop trading and cancel deals after nickel costs reached $100,000

Meanwhile, the London Metal Exchange (LME) stopped nickel trading on Tuesday after prices soared to even more than $100,000 per tonne, owing to short-covering by one of the globe’s largest manufacturers.

London Metal Exchange(LME)

The LME’s surprise action came as Western restrictions challenged supply from leading producer Russia, marking the 145-year-old exchange’s toughest challenge in decades.

In a letter to representatives, the LME stated that the recent events are unexpected and the nickel industry’s suspension has generated a number of problems for market players that must be resolved.

Even after the market collapse triggered by Russia’s attack on Ukraine, market participants are moving for the metal required to make stainless steel and electric motor batteries.

Traders claim that some position holders have been unable to meet margin requirements.

The LME increased nickel margin calls by 12.5 percent to $2,250 per tonne, and nickel trading on all places was halted for the rest of the day.

LME announced that all trades would be cancelled beginning Tuesday, when stock market stopped, and that it would be a multi-day shutdown.

The LME also declared that it would temporarily suspend posting official and closing nickel costs, as well as postpone the physical delivery of developing contracts.

The LME will consciously strategize for the reopening of the nickel industry and will notify the workings as quickly as possible to the market.

Prices Doubled

Before the LME stopped trading on its electrical components and in the open uprising ring, the three-month price of nickel on the LME had more than doubled to $101,365 per tonne.

Nickel was trading at $80,000 per tonne when markets was shut down, up 66 percent on the day and 177 percent since Monday.

The Shanghai Futures Exchange lifted nickel trading costs and advised investors to avoid risks, invest prudently, and collaborate to sustain market stability in China.

In evening trading on the Shanghai exchange, nickel reached a new high of 267,700 yuan ($42,380.39) per tonne, and it also reached the 15 percent limit early on Tuesday.

Owing to low inventory levels, which have lowered on the LME since October, the unpredictability induced by Russia’s attack and subsequent sanctions has added to an already hawkish nickel market.

According to a JPMorgan strategist, Russia is the biggest manufacturer of battery-grade nickel, compensating for 15-20% of world supply.

Nickel trading is not expected to reinstate before March 11, according to LME.

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