LME nickel squeeze (2022)

The LME nickel squeeze (2022) was a market dislocation of 7 and 8 March 2022 in which nickel prices on the London Metal Exchange more than doubled, breaching USD 100,000 a tonne, as fears of losing Russian supply after the invasion of Ukraine collided with a massive short position held by the Chinese producer Tsingshan, forcing the exchange to suspend trading and cancel a day's trades. No state attacked anyone; the case matters because it showed a core commodity-pricing venue failing under sanctions-adjacent geopolitical stress, with the exchange's emergency powers themselves becoming the contested instrument.

Context

Russia is a major producer of refined class-1 nickel, and in early March 2022 markets were pricing the possibility that sanctions or self-sanctioning would strand that supply. Tsingshan's founder Xiang Guangda had built a short position reported at well over 150,000 tonnes across LME and over-the-counter positions, betting that his company's Indonesian output would push prices down. Rising prices generated escalating margin calls on the short, whose forced covering fed the rise: a classic squeeze amplified by war risk.

Campaign

On 7 March nickel rose about two thirds to close near USD 48,000 a tonne. In early trading on 8 March it spiked through USD 100,000, and margin calls threatened defaults by Tsingshan's banks and brokers that the LME judged a systemic threat. The exchange suspended nickel trading at 08:15 that morning and, decisively, cancelled all trades executed on 8 March, a step without modern precedent at that scale; the cancelled trades were reported at close to USD 12 billion in value. Trading resumed on 16 March with daily price limits. Counterparties who had profited from the cancelled trades sued: Elliott Associates claimed USD 456 million and Jane Street USD 15.3 million, arguing the LME acted unlawfully in erasing concluded bargains. The High Court in London ruled for the LME in November 2023. In March 2025 the Financial Conduct Authority fined the LME GBP 9.2 million for failings in its volatility controls, and the exchange-commissioned Oliver Wyman review had already catalogued failures in margin design and OTC visibility.

Outcome

Tsingshan negotiated standstills with its banks and survived; the LME's nickel contract suffered lasting damage to liquidity and credibility, with volumes migrating partly to Shanghai. The episode drove reforms including OTC position reporting and volatility controls across LME metals.

Assessment

The case is read two ways, and the readings are complementary rather than contested. As market plumbing, it demonstrated that a benchmark venue can be broken by a single concentrated position interacting with war risk, the fragility treated at Commodity futures exchanges and benchmark price infrastructure (Brent, LME) and Central bank and market-infrastructure resilience technology. As statecraft terrain, it showed the defensive weight of exchange discretion: the LME, owned by Hong Kong Exchanges and Clearing, cancelled trades in a way that spared a Chinese national champion and burned Western funds, a fact the litigation aired without establishing improper motive. For economic-warfare planners the lesson is that benchmark infrastructure is both a target surface and a jurisdictional asset in economic conflict.

See also

London Metal Exchange · Commodity futures exchanges and benchmark price infrastructure (Brent, LME) · Commodity-price manipulation · Central bank and market-infrastructure resilience technology · Coalition sanctions and export controls against Russia after the full-scale invasion of Ukraine (2022-present) · Economic warfare

Sources

• Oliver Wyman, Independent Review of Events in the Nickel Market in March 2022 (commissioned by the London Metal Exchange, January 2023).
• Financial Conduct Authority, final notice and GBP 9.2 million penalty against the London Metal Exchange (March 2025).
• High Court of England and Wales, judgment dismissing the Elliott Associates and Jane Street claims against the LME (November 2023), as reported in the financial press.