(Bloomberg) -- The London Metal Exchange halted nickel trading minutes after it started, citing a technical issue with its new daily limit, as prices plunged immediately when trading resumed after a week-long suspension.
Trading in nickel ended almost as soon as it had begun. Only 206 lots, or 1,236 tons of nickel, changed hands before the market stopped trading within seconds on Wednesday morning. Most of those trades took place at the limit price of $45,590 a ton. Several trades appeared to be at prices below the 5% limit, suggesting they may later be canceled by the exchange.
“Following re-open, the market moved to its limit down pricing band,” the LME said in a statement. “We have now halted the market to investigate a potential technical issue with the limit down band, and will update as soon as possible.”
The slump is a sign that last week’s historic short squeeze is easing. It narrows the gap between nickel contracts on the Shanghai Futures Exchange, which have continued trading during the suspension. Last Tuesday’s historic decision to halt trading came after spiraling prices left some brokers scrambling to pay huge margin calls against bearish positions held by top producer Tsingshan Group Holding Co.
More than 8,600 contracts, or 51,600 tons of nickel, were offered for sale in the electronic order book as the market opened, versus 3 contracts bid.
The slump is a sign that last week’s historic short squeeze is easing, after Tsingshan secured a standstill agreement with its banks. Commodities markets have been hit by a wave of selling since the LME halted trading to defuse the unprecedented rally that it said posed a systemic threat to its market, although other metals regained some ground on Wednesday.
Shanghai Futures Exchange contracts closed up 8.6% at 235,200 yuan ($37,048) a ton, but remained below LME prices before the London market opened.