Critical Minerals and Energy Intelligence

Nickel Market Struggles as London Metal Exchange Faces Liquidity Crisis

The London Metal Exchange (LME) is grappling with a severe decline in nickel trading volumes following an historic short squeeze, which has triggered concerns over the market’s liquidity.

Despite efforts to resume trading, nickel has remained largely stagnant, with minimal activity even on days when prices were trading within the 15% daily limit.

The dwindling liquidity poses an escalating crisis for producers and consumers who rely on the LME to hedge their pricing risks.

Consequently, core users are increasingly questioning whether the 145-year-old exchange still serves as a viable mechanism for industrial companies seeking to hedge their price risks, as well as for traders and investors who have contributed to nickel’s success as one of the exchange’s prominent contracts.

Moreover, this trend extends beyond nickel. Trading volumes have significantly declined in the larger copper and aluminum markets since the LME’s controversial intervention earlier this month. Still, considering the severity of the events that set all this off….

Anthony Milewski

Chairman, Nickel 28 Capital

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