Unprecedented surge in nickel futures, the market closed on the sidelines - Shandong Jiugang Tisco Steel Co., Ltd.

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Unprecedented surge in nickel futures, the market closed on the sidelines

Unprecedented surge in nickel futures, the market closed on the sidelines

In the past two trading days, there has been an extreme trend of nickel in London, and the price has risen from about US$30,000/ton to more than US$100,000/ton. This is difficult to attribute to strong fundamental support. “Shen Zhaoming, an analyst at CITIC Futures Nonferrous Metals, said that there may be a phenomenon of long-short squeeze in London nickel, and the short position has greatly exploded, causing the price to rise in a straight line. The current increase in nickel prices is difficult to explain from a fundamental point of view.

The abnormal trading fluctuations of nickel prices caused the trading venues to take action. In addition to canceling all nickel transactions after 0:00 a.m. on March 8, local time, the London Metal Exchange also issued an announcement on the same day that nickel contracts were suspended from 8:15 on March 8, London time. Other contracts will continue to trade as normal, but will be closely watched, the LME said. In the next step, the LME will actively plan the reopening of the nickel market and will announce the mechanism to the market as soon as possible.

The LME said it may consider a multi-day suspension. In this case, the LME will also arrange to process the upcoming settlement. Earlier in the day, the LME announced the addition of a deferred delivery mechanism for all major contracts, including nickel.

In recent years, Chinese enterprises have suffered a number of major losses in the international derivatives market, exposing problems such as the failure of some enterprises’ internal control and risk management systems, and the imperfect market supervision mechanism. For enterprises, it is necessary not only to establish a scientific and effective risk management system, but also to have means, tools and risk plans for risk transfer and hedging.

“Using futures tools for risk management requires a very meticulous professional plan and the discipline to implement the plan in operation, so as to avoid turning management risks into new risks.” Deputy General Manager and Chief Economist of Wuchan Zhongda Futures Co., Ltd. Jingchuan said that it is necessary to deeply and objectively study the risk exposure of enterprises, and determine the output, output time, market position, proportion, design of entry and exit, and capital guarantee that the company’s position needs to refer to. On this basis, make full use of futures, options and over-the-counter derivatives to avoid centralized delivery, market imbalance and capital rupture.

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