THE LONDON Metal Exchange suspended nickel trading again yesterday due to a "system error" almost immediately after reopening from a weeklong shutdown.

The nickel market at the LME had been shuttered since last Tuesday following a surge in prices that left short sellers nursing record losses.

But in a statement yesterday the exchange said it had suspended trading again due to a glitch which had led to some trades to be executed below the new price limits laid out by the exchange.

In a statement, the exchange said: "As the market opened, the uncrossing algorithm discovered an opening price of $45,590 for 3-month nickel.

"Unfortunately due to a systems error, LMEselect then allowed a small number of trades to be executed below this lower daily price limit.

"The LME immediately decided to suspend nickel trading on LMEselect while the system error is investigated."

The exchange had set out price limits before reopening to prevent a repeat of the chaos last week, when it suspended trading as prices roared to record highs above $100,000 a tonne.

The LME said that all nickel trades executed at the lower price on LMEselect, its trading system, would now be cancelled.

It follows a controversial move from the LME to scrap $3.9bn (£2.9bn) worth of trades last week as the price surged.

The volatility was sparked by a major short bet from one of the world's top nickel producers, Tsingshan Holdings, which had been building a short position in the metal since last year, betting prices would fall.

Prices then rocketed as Tsingshan snapped up large amounts of nickel to cover its short bets.

Tsingshan has to either pay off the outstanding short positions, which could be as high as $8bn or prove it has sufficient deliverable nickel to repay.

The volatility in commodities has led some traders to abandon the London Metal Exchange, with Luke Sadrian, boss of Commodities World Capital, saying last week he had exited all of his LME positions after trading was suspended, despite being "ragingly bullish on copper".

(c) 2022 City A.M., source Newspaper