Nickel trading suspended as price more than doubles, gold nears all-time high
Prices are surging for many commodities on fears of supply disruptions from the ongoing conflict in Ukraine.
The London Metal Exchange (LME) suspended trading in nickel yesterday as its price more than doubled to over US$100,000 a tonne on Tuesday in Asia trading hours, off the back of a 70% price increase on Monday.
The carnage in the LME’s trading pit – the venerable UK exchange is the last holdout of open outcry trading at a major bourse – is of course due to Moscow’s invasion of Ukraine. Russia is one of the world’s largest nickel producers, with a 10% global share of the metal itself and up to 20% of the battery-grade nickel used in the production of electric vehicles.
While the price later retreated to US$80,000 before trading was suspended, at one point China Construction Bank was forced to ask for extra time to meet a margin call for a client, an astonishing development for the world’s second largest bank which has assets on its books in excess of $4 trillion.
Oil
The threat of US embargo on Russian oil could see its price go to over US$200 per barrel, according to analysts at Bank of America (BofA).
Overnight trading on Monday pushed the US benchmark West Texas Intermediate futures to over US$130/bbl on Monday night, while it hit US$124.14/bbl on Tuesday.
Russia is clearly rattled by the noises coming out of Washington. The country’s deputy prime minister Alexander Novak said earlier in the week that if the US follows through on its threats there will be a catastrophic impact on global markets which could drive the price of oil over US$300 a barrel.
Gold
Gold has been hovering over the critical US$2,000 mark as fighting continues in Europe.
Overnight trading saw it move to a high of US$2,066, however analysts at US bank Goldman Sachs say there is potential for significant further upward movement in the yellow metal’s price.
Gold’s all time high of US$2,075.14 an ounce, which it hit in mid-2020 looks under threat with the US lender’s analysts revising their six-month price prediction to US$2,500/oz, up from a previous level of US$2,050/oz.
Aluminium
Zinc was not the only metal setting records at the LME this week.
On Monday aluminium pushed past US$4,000 for the first time for the three-month contract, off the back of a series of record prices for the industrial metal.
It pared back in overnight trade to US$3,590, still higher than the previous record high the same contract reached in early February of US$3,340 a tonne.
Aluminium is also a key input in motor vehicle production, signalling pain ahead for car producers globally which have already been struggling with global supply chains which have been wrecked by the COVID-19 pandemic.
Wheat
Fears of food shortages were raised as the wheat price continued to head skyward over supply disruptions from the combat in Europe.
On Monday wheat futures traded up to their limit in Chicago for the fifth consecutive day, rising 7% to $12.94 on the Windy City’s exchange. On Tuesday the price of the basic foodstuff hit $12.80.
The acute price rises have led aid agencies to warn of food shortages across the Middle East and North Africa, with countries in the region currently sourcing virtually all their wheat from Ukraine and Russia with no obvious substitute to import from in the short term.