Nickel Drops From Two-Month High After Sudden Slump in Shanghai

Nickel in London fell from a two-month high after futures in Shanghai slumped by the daily limit in a sudden move during overnight trading. Prices on the London Metal Exchange fell more than 4% on Friday, trimming their weekly gain. Nickel on the Shanghai Futures Exchange pared losses after tumbling as much as 8.6% in the final minutes of the overnight session. Base metals were broadly lower on Friday as investors are focused on the National People’s Congress in Beijing, which began with pledges to sell bonds and omit a numerical target for economic growth this year due to virus uncertainties stemming from the pandemic. Citigroup Inc. said this weekit’s bearish on nickel as the metal is heavily exposed to some of the worst-affected end-use demand sectors. Still, the sudden slump in Shanghai caught the market off guard as there hasn’t been a change to market fundamentals or news to prompt the move, according to Celia Wang, an analyst at Mysteel Global. “Some bulls exited with big positions during the last minute of the trading session, triggering a price slump amid insufficient liquidity,” she said. “That then further caused position-closing under program trading.” LME nickel was 4% lower at $12,250 a ton by 11:04am in Shanghai. SHFE futures were down 4.3% at 100,620 yuan a ton. The reason for the drop remains a mystery, according to Liu Yuqiao, an analyst with Shanghai Metals Market.   (bloomberg)