LONDON: Base metals slumped on Wednesday, including aluminium despite continued worries about Russian supply, as cautious investors slashed positions in the wake of a halt in nickel trading.
The London Metal Exchange intervened on Tuesday to calm the nickel market after prices rocketed in a matter of hours to records of over $100,000 a tonne.
The LME does not anticipate resuming nickel trading before Friday.
“The market is pausing, trying to take stock of what’s going on, and market positions are being adjusted accordingly,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“It highlights the incredible difficulty in navigating these markets right now.”
Three month LME aluminium had slid 4.7% to $3,333 a tonne by 1715 GMT during a volatile session in which it earlier jumped as much as 5.2%.
“Markets are exiting risk amid high volatility,” Al Munro at broker Marex said in a note.
Aluminium has gained nearly a fifth this year due to continued worries about the impact of the invasion of Ukraine by Russia, which accounts for about 6% of global supply of the lightweight metal.
Russia’s President Vladimir Putin signed a decree on Tuesday restricting the import and export of goods and raw materials “to ensure the security of the Russian Federation,” but specific materials were not identified.
The conflict and ensuing sanctions have played havoc with global supply chains, sending prices soaring across commodities markets.
Russia supplies nearly 10% of world nickel needs and also is a major producer of natural gas used to generate electricity that powers production of metals such as aluminium and zinc.
China’s Shanghai Futures Exchange will suspend the trading of some nickel contracts for one day, beginning from the night trading session on March 9.
LME copper shed 2.2% to $9,980 a tonne, zinc dropped 6.3% to $3,874.50, lead fell 3.9% to $2,400 and tin plunged 13.7% to $42,005.
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