The trade of precious metals is being significantly affected by the ongoing Russian invasion of Ukraine. As various countries impose sanctions and major global corporations withdraw from Russia, the economic pressure on Russia is intensifying. This pressure is particularly crippling for Russia’s key industries, including the export of critical materials.
Russia is a major exporter of precious metals, with nickel being one of its most crucial exports. Nickel is essential for the production of batteries, stainless steel, and various other goods. However, with the halt of Russia’s nickel exports, the price of nickel has surged dramatically. As of today, the cost of one metric ton of nickel has surpassed $100,000 on the London Metal Exchange, leading to a temporary suspension of nickel trading.
Ole Hansen, the head of commodity strategy at Saxo Bank, highlighted that the sharp rise in nickel prices is compounded by existing global market tension caused by ongoing supply chain challenges. He emphasized that the current nickel market is driven more by fear than by traditional supply and demand dynamics.
Given the assumption that Russia’s supply chain would remain intact, many commodity investors had previously taken short positions on metal stocks. However, with the disruption in Russian supply, these investors are now facing significant losses. Hansen noted that the sudden cutoff of a major supply source from Russia has left these investors with exposed short positions that they urgently need to exit.