The Great London Nickel Melt-Up

Eighteen minutes of chaos sent prices for a key commodity soaring—and nearly ruined many of its traders

- Pat Regnier

It was 5:42 a.m. on March 8 in London when the nickel market broke. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office.

On this day, however, metal traders across the city were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. Nickel prices usually move a few hundred dollars per ton in a day. For most of the past decade, they’d traded between $10,000 and $20,000.

Yet the day before, the market had started to unravel, with prices rising a stunning 66%, to $48,078. Now the traders watched with a mixture of horror and grim fascination as the price went vertical. Already at an all-time high by 5:42 a.m., it lurched higher in stomach-churning leaps, soaring $30,000 in a matter of minutes. Just after 6 a.m., the price of nickel passed $100,000 a ton.

For participants in commodities exchanges, a price rally is not necessarily good news. Miners, traders, and manufacturers often use the market to make short bets—that is, to make money when prices fall. And when those wagers move violently in the opposite direction, they can be hit with huge margin calls, or requests to put down more cash to back their trades. The head of one London metals brokerage recalls feeling sick as he watched the moves, realizing what the spike would mean for his company, the market, and the global metals industry. “Those 18 minutes will haunt me,” says the executive, who wasn’t authorized to speak publicly.