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LONDON — Nickel will resume trading on the London Metal Exchange (LME) in a fixed price range for the first time on Wednesday after extreme price volatility triggered a rare market close last week.

The LME halted nickel trading and canceled trades after prices doubled on March 8 to more than $100,000 a tonne within hours in a surge that sources have blamed on short hedging by one of the main world producers.

When trading resumes at 08:00 GMT on Wednesday, nickel price movements will be limited to 5% above or below the last closing price before the suspension, the LME said.

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The exchange also imposed 15% limits from Tuesday on other base metals, including aluminum, copper, lead, tin and zinc – the first time in its 145-year history that the LME imposes limits on outright contracts.

The conflict in Ukraine has pushed the price of some metals to record highs amid concerns over supply constraints from Russia – a major producer of aluminium, copper and nickel – following Western sanctions radical.

The LME decided price limits on nickel were needed to maintain stability after wild swings last week, when the price jumped over $18,000 on Monday, then over $50,000 a day later. late, triggering the suspension of trade.

While three-month nickel was around $80,000 a ton when trading was suspended on Tuesday, Monday’s closing price was $48,078. This means that the band on Wednesday will be $45,674 to $50,482, or 5% either side of this closing price.

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If a price limit is reached, trading will not be suspended, but all offers above the upper limit and offers below the lower limit will be rejected, according to a notice from the LME.

An LME spokesperson confirmed that this was the first time it had placed price limits on firm contracts.

Trade sources said the nickel market is expected to be calmer on Wednesday as China’s Tsingshan Holding reached a standstill deal with banks under which they won’t make margin calls or close out positions. on nickel.

Price limits are common on other exchanges and have been discussed periodically during periods of volatility on the LME, but most members preferred to stick to modest regulation.

China’s Shanghai Futures Exchange uses price caps and imposed a 17% limit on its nickel contracts on March 11.

The CME also has price limits, using what it calls a dynamic circuit breaker for its main copper industrial metal contract.

The LME, the world’s oldest and largest market for industrial metals, is owned by Hong Kong Exchanges and Clearing Ltd. (Additional report by Pratima Desai; editing by David Clarke)