During the GameStop mania in Q1 of last year, the r/wallstreetsbet forum popularised the acronym MOASS, or “Mother of All Short Squeezes”.

In a wild twist in the commodities markets overnight, nickel did its best to take over that title, leaping a staggering 250%. Before tracing back slightly, the element you may only barely remember from high school chemistry breached a record high of $100,000 per metric ton.

Nickel out there looking like Gamestop. Chart via Financial Times

As is standard with earth-shattering moves of this size, there are other factors than simply supply and demand. And has become the norm in all financial markets recently, a lot of it stems from Russia’s invasion of Ukraine.

The move originated from trading overnight in Asian markets. Investors seemed to have hypothesised that rising commodity prices presented an attractive opportunity to short commodities, based on the assumption that Russian supplies would not be cut. Of course, much like what happened GameStop, that bet was very wrong and, consequently, a vertical jump in price ensued as investors all looked to exit their positions at the same time – a good old-fashioned short squeeze.

Ole Hansen, head of commodity strategy at Saxo Bank, told CNBC that “it is a very dangerous market right now … it is driven by fear”, which summed up the price action well. The pandemonium led to the London Metal Exchange (LME) halting trading, as the panic over low inventories reverberated through the market. Warehouses registered with the LME have nickel inventories marked at a three year low. Concerns over delays, further restrictions and logistical issues further exacerbated the volatility and price rises in the market. Complete the recipe with a dallop of leverage (it always spices things up, doesn’t it?) and you get your bananas price action.

If you are wondering what nickel is actually used for, you aren’t alone. I dug out my old exam notes and, for the record, it’s main use cases are electric vehicle batteries and stainless steel. Russia, for its part, supplies about 10% of the world’s nickel demand.

Lead, zinc and aluminium also jumped, although not to the same headline-grabbing extent that nickel did. Gains were also later pared back after the chaos subsided somewhat.  

It’s a further reminder that with Putin seeming more volatile than the nickel price itself, any foray into the markets at this moment in time must be met with extreme caution and an acknowledgment that each new day can bring along another entirely unforeseen scenario. Today, it was nickel’s turn.

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