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HOTLINE: Nickel trader profits from price crash on LME Select

February 10, 2012 - 11:24 GMT Location: London

KEYWORDS: Copper , nickel , LME Select , price crash

A huge order to sell copper at 03:15 UK time on Thursday February 9 whacked London Metal Exchange markets very hard, with copper losing around 1.5% of its value in a matter of seconds.

The price crash also created the trade of the year so far for a nickel merchant.

He left a sell order on the LME’s electronic trading platform at $22,000 per tonne and a buy order at $21,215.

At 03:15:48, his sell order was filled; five seconds later he covered at $21,215, netting him $785 per tonne.

If he could trade that profitably all the time, he would make $4.4 million a minute or $371 billion a year, he reckoned.

Alex Harrison
aharrison@metalbulletin.com
Twitter: @alexharrison_mb

All material subject to strictly enforced copyright laws. © Euromoney Institutional Investor PLC.

Aluminium

May 24, 2012 17:07 CLOSE TO CLOSE: Base metals follow euro higher in LME kerb
May 24, 2012 14:40 Trafigura, Ormet will explore joint investments in aluminium
May 24, 2012 13:48 Base metal prices stable in LME officials as euro plateaus
May 24, 2012 12:20 Constellium signs multi-year, $2bn supply agreement
May 24, 2012 11:25 Shanghai copper price little changed; arbitrage gap narrows

Lead & Zinc

May 24, 2012 17:28 Pan American Silver’s revenues up 20% in Q1
May 24, 2012 17:07 CLOSE TO CLOSE: Base metals follow euro higher in LME kerb
May 24, 2012 13:48 Base metal prices stable in LME officials as euro plateaus
May 24, 2012 12:08 Brazilian zinc consumption will grow 6% in 2013
May 24, 2012 11:25 Shanghai copper price little changed; arbitrage gap narrows

Copper

May 24, 2012 17:28 Pan American Silver’s revenues up 20% in Q1
May 24, 2012 17:07 CLOSE TO CLOSE: Base metals follow euro higher in LME kerb
May 24, 2012 15:26 Copper products sales in Brazil hit record $8.6bn
May 24, 2012 13:59 Copper concentrator failure halts production at Botswana’s Mowana mine
May 24, 2012 13:48 Base metal prices stable in LME officials as euro plateaus

Nickel & Tin

May 24, 2012 17:07 CLOSE TO CLOSE: Base metals follow euro higher in LME kerb
May 24, 2012 13:48 Base metal prices stable in LME officials as euro plateaus
May 24, 2012 10:15 Base metals prices fall in LME pre-market in the wake of listing eurozone
May 24, 2012 05:50 Trafigura will move to Singapore this year
May 24, 2012 03:57 LME ASIAN WRAP: Copper prices see small lift from US data

Comment & analysis

EXPERT VIEW FROM ERNST & YOUNG: Horror week favours the brave

Seven days is a long time in the investment world, but last week must have felt longer than most.
COMMENT: When super-cycle poster child BHP Billiton trims its plans...

BHP Billiton is one of the poster children for the commodities super-cycle: a mining company whose immense upstream assets in copper and iron ore have fed the industrialisation of China since the early years of the 21st century and enabled it to return $52 billion to shareholders between 2001 and 2011.
LORD COPPER: There is nothing to fear after JP Morgan loss ...

So, here we go again. Another bank, another huge trade gone bad. This one doesn’t even appear to have been a case of rogue trading; a whole desk seems to have been operating with the full knowledge of the management and/or risk committee.