$100,000 (£76,200) a tonne after Tsingshan Holding, a nickel alloy and stainless-steel manufacturer in China, was forced to buy large amounts of the metal to cover its short positions. This was amid worries over supply delays emanating from conflict in Ukraine, which prompted London Metal Exchange (LME) to halt trading. After a week-long suspension, the LME reopened trading in the commodity on 16 March, but UK financial regulators do not appear to be pleased with its handling of the matter and has decided to investigate the metal bourse in this regard.
In a joint statement issued last week, the Financial Conduct Authority (FCA) and the Bank of England (BoE) said the suspension of trading had underlined concerns previously raised regarding the structure of the market and “particularly the role of transparency”.
Nornickel, headquartered in Moscow, is the largest supplier of refined nickel in the world. The company is led by Russian business oligarch Vladimir Potanin, who was first sanctioned by Canada last week. Amid the market chaos resulting from the conflict between Moscow and Kyiv, LME decided to cancel all transactions made on 8 March. While this triggered uproar among metals traders, the metal bourse said at the time that it needed to maintain orderly trading and prevent smaller members of the exchange from going bust.
Subsequently, last week, the Metal Exchange acknowledged the decisions made in the run-up to its trading suspension were “unprecedented”. “The LME fully recognises the impact of these events on a broad spectrum of market participants, and understands that not all participants agreed with the course of action undertaken,” it said. “The LME sought to act in the interests of the market as a whole and acknowledges the concerns expressed by some market participants.”
