The nickel short squeeze, explained

Russia is one of the world’s largest producers of nickel. When the country invaded Ukraine, fear of supply disruptions sent the price of nickel into a frenzy, so much so that on March 8, the London Metal Exchange had to suspend nickel trading. 

At the time, prices for the metal had surged some 250% in just over 24 hours. Nickel trading has since resumed, with prices now in free fall. What happened to the price of nickel is called a short squeeze.

Remember the meteoric rise of GameStop stock? Short-selling, as we explained at the time, works like this:

The short investor borrows a stock, let’s say at $10, and sells it. When the stock price drops to $5 the next week, they buy the shares back, return them, and pocket a $5 profit. If the stock instead rises to $15, the short investor either closes the trade for a $5 loss, or pays more interest to keep the trade open. For short-sellers, the risk can be immense—there’s no ceiling on how high a stock can soar, meaning their losses can climb indefinitely.

$100,000: Price per metric ton that nickel jumped to before trading stopped on the London Metal Exchange

$25,000: Price per metric ton a week before that 

$8 billion: Trading losses of Chinese nickel giant Tsingshan Holding Group, which was behind the short squeeze

300 million: The world’s nickel reserves in tons

1453°C: Melting point of nickel 

Nickel, which has a distinct silvery shine, is the fifth-most common element on Earth. Most of the time, it’s alloyed—or mixed with other metals—to make goods that are used throughout the global economy.

• Stainless steel. Most (72%) of nickel is used to make stainless steel.
• Batteries. This includes rechargeables and those that go in electric vehicles.
• Coins. The $0.05 piece in the US is one example. 
• Catalyst. Nickel gives glass its green color, and can be used for hydrogenating vegetable oils.

Russia is among the top miners of nickel, but Indonesia is the globe’s top producer, followed by the Philippines.

• How the nickel crisis may impact Africa
• Why the surge in nickel prices is bad for a Chinese nickel giant
• The world’s biggest cargo planes are reliant on spare parts from Ukraine
• Kyiv or Kiev? How to pronounce the name of the capital city of Ukraine and why
• Why some global retailers say they’re staying in Russia