By Eric Onstad
LONDON (Reuters) - The London Metal Exchange's (LME) benchmark nickel surged 15% on Wednesday to hit its upper trading limit, reversing direction and climbing for the first time since trading resumed last week.
LME nickel gained 5.5% at the open and hovered at stronger levels for the first few hours of trade, but spiked by nearly $3,000 in the span of about 20 minutes.
It hit its upper limit of $32,380 a tonne and was up 14.3% at $32,195 by 1055 GMT, having traded 2,674 lots.
A trader said it was unclear what was behind the sudden jump, but that it might be due to computer-driven automated trading systems.
"In any case, the underlying market is tight, then if you take Russian uncertainty into account, it looks cheap to me," he said.
LME benchmark nickel slumped for several days in very low volumes and repeatedly hit its lower trading limits after trade was restarted after a break to calm the market.
During that period, traders said LME nickel was moving lower towards levels seen on the Shanghai Futures Exchange. On Wednesday, June futures in Shanghai closed the afternoon session up 3% at 205,300 yuan, or about $32,222.
LME volumes have picked up since Tuesday, suggesting the market is starting to return to normal after two weeks of chaos. The world's top nickel trading venue endured a record price surge, a six-day trading suspension, and then a restart hit by technical glitches.
The LME, owned by Hong Kong Exchanges and Clearing Ltd, suspended nickel trading on March 8 after prices spiked by more than 50% to over $100,000 a tonne.