The London Metal Exchange should strengthen its rules and oversight to prevent short-term market distortions, according to an independent review of March’s nickel market chaos which found the marketplace had insufficient tools to stop prices spiralling out of control.
The report, conducted by consultancy Oliver Wyman, laid out further details on the depth of the crisis in the run-up to a decision by the LME, the world’s largest hub for metals trading, to suspend nickel trading for a week and cancel billions of dollars’ worth of trades.
LME’s radical step on March 8 came after nickel prices surged 270 per cent over three trading days to exceed $100,000 per tonne, when a bet on falling prices by China’s Tsingshan, the world’s largest stainless steel producer, collided with fears of sanctions on Russia, a large nickel producer.