Nickel Bulls Are Taunted by a Huge Sell Order as Trading Reopens

(Bloomberg) -- Nickel barely traded after the market reopened on Wednesday, but dealers on the London Metal Exchange were focused on a large sell order at the limit-down price of $45,590 a ton.

The LME’s electronic trading platform showed sell orders for 8,281 lots, equivalent to 49,686 tons of nickel, at about 4 p.m. London time on Wednesday.

Traders said it wasn’t surprising that some market participants with long positions might want to exit following the turmoil of the past two weeks. 

But it was the size of the sell order that raised eyebrows: 49,686 tons is equivalent to two thirds of all the nickel currently in LME warehouses. And the 8,281 lots were spread across 112 orders, according to Bloomberg data, implying an average order size of 74 lots. There were also several sell orders for 100 lots at prices above $45,590.

That’s unusually large for the nickel market, where contracts typically change hands in clips of a few lots, and only a few participants have positions of more than a few thousand tons.

On March 2, by comparison, before the recent short squeeze caused chaos, the largest bid or offer on the LME’s electronic market in the course of the entire day was 49 lots.

The LME has been undertaking heightened market monitoring, both before and after the resumption of nickel trading, it said in a statement.

“If our monitoring indicates that abusive activity has taken place by one or more participants, the LME has powers to commence a formal investigation,” the exchange said. “We would also encourage any concerned market participants to voice any concerns to us directly.”

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