BRIEFING: What next for SHFE'S hobgoblin nickel contract?

Just one month after it started trading on the Shanghai Futures Exchange, nickel has gained the nickname of “hobgoblin” from Chinese investors, which in Mandarin happens to be a homophone of “devil nickel”.

Rising concerns about short squeezes amid recent sharp volatilities in nickel prices have landed the new contract with this reputation, even ahead of its first delivery date in July. Earlier this month, on April 14, around 100,000 lots of nickel were traded on the Shanghai Futures Exchange, at a point when the market was trading at or near its lows, leading to speculation that large volumes of short positions were taken that day, one source at a large nickel trading company said. In recent days though, prices have risen, sharpening interest in how those shorts will cover their positions. On Monday April 27, the SHFE benchmark July nickel contract stayed at 101,490 yuan ($16,590) per tonne throughout the session, having hit its daily upside limit of 5% on Friday's night session to close at that level. The LME three-month nickel contract also rose by nearly 1% from its opening in Asian trading hours in the...

Published

Linda Lin

April 27, 2015

10:27 GMT

Shanghai