August 29, 2006
A Nickel for Your Thoughts
The LME only provides the current year of historical data so I can’t draw a very nice chart, but here’s a look at nickel this year through the end of July along with its warehouse stocks level. Andrea Hotter wrote something I found pretty remarkable in this week’s Barron’s:
To calm prices, the LME allowed shorts, who can’t make physical deliveries, to defer delivery by paying $300/ton a day instead of defaulting, with offsetting longs getting $300/ton as compensation. Concerns over a settlement default drove the LME’s intervention. The LME Chief Executive Simon Heale says with nickel stocks at historically low levels, there is a ‘genuine material shortage. Our first priority is to ensure that trading remains orderly and to prevent the risk of settlement defaults.’”
I wonder if it’s some “rogue” Chinese trader who is short nickel?
August 29th, 2006 at 8:30 pm
Posco (a Korean company) is reportedly massively short nickel - something like 10% of the open interest. (It denys that its short position is that big).
August 29th, 2006 at 8:55 pm
Doug: Yeah, I read that too … of course if you were massively short nickel you would deny it too, so maybe it’s Posco. For perverse reasons I’m still hoping it’s some Chinese guy, lol.