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The Wall Street Journal: London nickel market freeze extended to sort out big trading loss amid Ukraine war

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London’s nickel market will stay closed at least until next week, a person familiar with the exchange said, giving the London Metal Exchange more time to resolve a crisis caused by a huge loss-making trade originating in China.

The London Metal Exchange paused trading in nickel Tuesday, the first time it had suspended a market since 1985. The exchange had said trading might resume as early as Friday. However, the LME failed to alert traders by 2 p.m. London time that the market would reopen, signaling that no trading in nickel would take place at least until Monday.

The nickel market, like much of the commodity world, has been upended by the war in Ukraine. Russia is a major supplier of nickel, which was already in short supply due to demand for electric-vehicle batteries and other industrial uses, such as stainless steel. The nickel trading freeze is one of the highest profile examples of how the war, and the punishing sanctions imposed by the West, have reverberated through financial markets.

The LME closed trading in nickel after a huge run-up in prices inflicted severe financial pressure on producers that had sold nickel forwards on the LME as a hedge. The biggest loser was Tsingshan Holding Group, the world’s biggest nickel producer, which had built up the biggest short position in the metal. At Monday’s prices, the company was sitting on a paper loss of $8 billion, The Wall Street Journal reported.

Nickel trading took place in the Shanghai market Thursday, with contracts falling the maximum 17% for the second day in a row, indicating pressure on the market was ebbing.

An expanded version of this story appears on WSJ.com

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