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.
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