The SHFE’s nickel contract has attracted a lot of attention in recent weeks as volumes have soared. In turn, this has driven the direction of prices on the London Metal Exchange.
The squeeze that shorts have been suffering because of the relatively limited number of deliverable brands on the SHFE, and the volatility that has resulted, have even earned the SHFE nickel contact the sobriquet of “hobgoblin” in China.
(In short, Norilsk material – which is widely traded in China and stocked in bonded warehouses – is not yet deliverable against SHFE short positions. Market sources say this is as a result of some debate about the appearance of the Russian material, rather than its chemical specification. Norilsk has declined to comment.)
The SHFE July nickel price retreated on Thursday May 7 after hitting a record high of 115,300 yuan ($18,860) in the session. It has gained a total of 20% in...