A sharp surge in nickel prices triggered margin call fears at the London Metal Exchange which suspended trading after prices doubled in hours.
Three-month nickel on the LME more than doubled to over $100,000 a ton yesterday before the LME stepped in to halt trading of the metal.
«The current events are unprecedented,» LME said in a notice. «The suspension of the nickel market has created a number of issues for market participants which need to be addressed.»
CCB Margin Call
The sudden surge in nickel prices triggered margin call fears, most notably at a global markets unit of China Construction Bank – one of the mainland’s four largest lenders.
The metal bourse, owned by the Hong Kong Exchanges and Clearings, gave CCB additional time to pay hundreds of millions of dollars of margin calls it missed on Monday though it quickly made the payment one day later to avoid formal default, according to a «Bloomberg» report citing unnamed sources.
Tsingshan Holding
The dramatic commodity price movements are widely believed to be fuelled in no small part by China-based Tsingshan Holdings, one of the world’s largest nickel and stainless steel producers.
Tsingshan founder Xiang Guangda – known as «Big Shot» – has reportedly been building a large short position on nickel since last year on the LME through his firm.
