The Night the Nickel Market Tripled in Hours

By early 2022, Xiang Guangda — the Chinese tycoon behind Tsingshan Holding, the world's biggest nickel producer — had built a short position of roughly 150,000 tons of nickel. About 30,000 tons sat on the London Metal Exchange; the rest were over-the-counter trades with JPMorgan, BNP Paribas, Standard Chartered, and United Overseas Bank. He had entered most of it around $18,000 to $19,000 a ton.

Russia invaded Ukraine on February 24. Russia is a major nickel supplier, and the market started pricing sanctions risk. Higher prices forced Tsingshan to post more margin; closing the short meant buying back contracts, which pushed prices higher, which forced more margin. Between Friday March 4 and Tuesday March 8, the three-month contract went from about $29,000 to $101,365.

Most of that move happened in a few hours of Asian trading. By 6 a.m. London time on March 8 the price had blown through $60,000. The LME suspended nickel trading and then did something it had not done in its 145-year history: it retroactively cancelled every trade that had printed since midnight. Roughly 9,000 contracts, around $4 billion in notional, were unwound. The price reset to the previous day's close.

The move saved Tsingshan and the OTC banks on the other side of its position. It also broke trust. AQR Capital, which had legitimately made money on the spike, sued. JPMorgan still booked a $120 million nickel loss for the quarter. LME nickel volumes stayed depressed for months and a UK High Court later ruled in 2023 that the cancellations had been unlawful, though the LME's decision itself stood on appeal.

A market is supposed to be a place where prices, once printed, are real. For one Tuesday in March 2022, the metal exchange decided that some prints were too real to keep.