Yeqing beijing, journalist for the wakatiya times (www. Chinatimes. Net. Cn)
The aftermath of the lonnie blank incident has led to new initiatives by the exchange. On 9 march, the london metal exchange (lme) announced that the nickel trading bond would be doubled from 10 march after closing。
While domestic nickel prices did not show up in the london market madness, price trends were also of concern to the market. Following closing on the afternoon of 9 march, a notice was issued in the previous period to suspend a one-day contract transaction for the nickel part of futures。
As a result of, inter alia, the above-mentioned news, on 9 march, the night pallet opening in the domestic market was largely green, with stainless steel falling by more than 10 per cent, and despite the suspension of the sale of the main nickel contract, the normal bargain of the nickel 2210, the contract of 2211 and the contract of 2208 fell。
The lonnie bond has doubled
On 7 march, the lme nickel offer jumped to $55,000, an increase of up to 90 per cent. On 8 march, the price of lme nickel continued to surge, breaking the $100,000 threshold. Following the extreme events, lme announced a suspension of the nickel trade at a price of $80,000 per ton。
The price of lme has soared since its creation 145 years ago。
Shortly after the suspension was announced, lme released another news that shocked the outside world. On the evening of 8 beijing time, lme announced that it would cancel all nickel transactions that had been carried out on or after 8 march 2022 british time at 00:00 or later in the morning, as well as on the lme screen trading system。
Other lme contracts will continue to be regularly traded but will receive close attention. Lme indicated that it would be actively planning for the reopening of the nickel market and that it would make disclosure mechanisms to the market as soon as possible. Given the geopolitical situation, lme might consider stopping for many days。
Subsequently, on 9 march, according to press reports, lme recently announced the resumption of nickel futures trading not earlier than friday (11 march) and a 10 per cent single-day increase and fall limit for nickel futures。
“all members of the institute currently meet fully their respective security requirements. However, lme is also aware that the credit environment in commodity markets as a whole is tense after geo-incidents and price booms. Therefore, the exchange does not expect to resume trading in nickel futures by 11 march, and will inform the market no later than 2 p. M. On the day before the resumption (london time)。
On the same day, lme also announced that, upon closing on 10 march, the nickel transaction bond requirement would be doubled to $4808/ton; in addition, the initial bond for aluminium, zinc and copper would be increased by 8. 3 per cent, 7. 1 per cent and 4. 4 per cent, respectively。
Nickel, stainless steel
Domestic exchanges are also protecting against the risks of trading in the same species, with varying nickel prices in the london market。
Following closing on the afternoon of 9 march, a notice was issued in the previous period to suspend a one-day contract transaction for the nickel part of futures。
At the time of closing on 9 march, the increase and fall in the n2204, n2205, ni2206, ni2207, ni2209, ni2212 and ni2301 contracts remained at 17 per cent and the trade bond ratio at 19 per cent。
According to the announcement, the contract between ni2204, ni2205, ni2206, ni2207, ni2209, ni2212 and ni2301 was suspended for one day from the night of 9 march。
As a result of the above-mentioned information, on 9 march, the opening of night pallets in the domestic market was largely green, stainless steel fell by more than 10 per cent, power coal fell by more than 9 per cent, crude oil fell by 5 per cent, fuel, iron ore and tin fell by more than 4 per cent, and palm oil increased by more than 3 per cent. Although the sale of the main nickel contract was suspended, the contracts of 2210, 2211 and 2208 of the normal trade fell by 17 per cent。
According to the daily securities newspaper, in the case of the short-term extremes of the lennox futures, the market was told that the green mountain group had been driven away by foreign investment. Qingshan group responded that domestic metal nickel plates would be replaced with high ice nickel under the flag and that sufficient spot delivery had been channelled through multiple channels. Industry sources have indicated that the potential for a reversal of the multiple power of the nickel futures market in london。
In addition, why did lme cancel the 8 march nickel deal? There is a claim that the market is corrupted and prices are highly distorted. The russian-ukrainian conflict was the trigger for this surge in nickel. After a short-term surge, however, the price of nickel has again surged away from the basics of supply and demand and has become a “garden” of capital killing, and the prevarication in the market for nickel is a long-settled drive。
There seems to be some evidence of manipulation. According to official lme data, the share of nickel futures billings held by a single customer has gradually increased from 30 to 39 per cent from 10 january to 50 to 80 per cent by 19 january. As of 13 january, the client's net multiple position on the nickel futures contract in march, the latest due date, and the combined volume of warehouse receipts had exceeded 90 per cent of total warehouse receipts. This overly concentrated position highlights the large spot trading consortium operating the lme futures warehouse bill market。
Experts say the hedging needs to be measured
On 9 march, lme also stated that once the nickel futures had resumed trading, the trading time would be reduced to 9 a. M. London time, until the exchange was confident that it would return to 1 a. M。
The inspector general for coloured futures and futures said to journalists in the wigand times that the lme vicious squeezing incident had also led to a sharp rise in domestic nickel prices, which, if kept high, could severely constrain the proper functioning of downstream industrial chains, including stainless steel, electroplating, special steel, alloys and new energy vehicles. This time, the qingshan group has been able to channel resources for delivery, highlighting the responsibility of domestic enterprises and a powerful response to bad faith abroad。
Sino-kim reported that the nickel market is fragmented and that short-term nickel prices remain strong, depending on developments in the russian-uu situation in the medium to long term, as well as on the degree of transmission and downstream acceptance of industrial chain prices. In the short term, the price of electron nickel has risen rapidly, the price of nickel iron/sulphate has fallen below the price of pure nickel, and the nickel market has become fragmented as a result of the confluence of factors such as uncertainty in the russian-uu situation, low stocks, cost support, and trade coercion。
In the medium to long term, the sustainability of nickel prices increases depending on the marginal changes in the situation in russia and ukraine, and the global supply-demand balance in the nickel sector began to shift from surplus to deficit in 2022 if, in extreme cases, all future production of russian nickel ceased; and the price transfer and downstream affordability of the industrial chain increased from $20,000 to $50,000, as in the case of new energy vehicles, and the cost of nickel raw materials increased by approximately $10,000 for eight electric cars with 60 kwh. We believe that the industry has limited capacity and that the price of nickel is high or will not be sustainable in the long term。
This ronnic outburst reminds market investors of other historical events such as the 1997 smelting of zinc, the 2004 mid-air oil, the 2005 national copper reserves and the mid-2018 allied oil。
Why do some of the companies involved often get “snipers”? Industry has found common ground in these cases, which are empty packages (offloads of futures or options rights), forced into money, both in overseas trading markets, and in the spot market, where there are higher spot items。
In response, the executive of a futures company indicated that most of the silos were empty because the market was always more expensive than the goods. The core of hedging in the futures market is the matching of derivative positions with spot physical (or contractual order) positions, and the excess hedging is to a degree “speculation”. In this sense, industrial enterprises, as futures hedges, must remain apprehensive about the market, and when holding derivatives empty, they need to keep their stockpiles under constant scrutiny, with particular care being taken in the case of low stocks. There is a greater need for caution and flexibility in the selection of tools and markets for non-cutting packages。
