Commodity prices on the global market have plummeted due to the war in Ukraineso much so that even money became too expensive to produce.
At Tuesday’s closing prices, the cost of nickel in a British 10p note is now much higher than the value of the coin itself.
That’s because each coin contains 25pc of nickel, and most of the world’s supply comes from Russia, which has been operating under trade sanctions since invading its neighbor two weeks ago.
Commodity prices rose on Tuesday with nickel hitting a record high above $100,000 (€91,000) a ton.
The London Metals Exchange (LME) has suspended nickel trading across all locations for at least the rest of the day after prices rose nearly 400pc from Friday’s close.
According to the Royal Mint, a 10p long piece weighs 6.5g, making 1.625g per nickel. At Tuesday’s prices, that means every 10p is worth about 12.5pc – a 25pc increase above its face value.
But it’s not just the cost of the minting components that matters.
If nickel prices stay high, it could complicate the energy transition with electric vehicle batteries being more expensive to produce.
“Nickel is clearly trading in crisis mode,” ING analysts said. “Fundamentals, despite stronger price support, do not justify this frenzy.”
They added that the market has long faced structural problems.
China’s Tsingshan Holding bought large amounts of nickel to reduce short-term bets on the metal, and its incursion into costly margin orders added to a record surge in conflict. in Ukraine, three sources familiar with the matter said.
One of the world’s largest producers of nickel and stainless steel, Tsingshan began building a short position – betting that prices will fall – in the nickel market last year.
Moscow’s invasion of Ukraine and Western moves to punish Russia, a key supplier, have phoned
a nickel market has increased in price.
Volatile prices add to the pressure on holders of large short positions, which already face additional margin calls with brokers, a practice known as margin orders. on financial markets.
Western sanctions have cut off Russia from international trade and financial markets to a degree never before seen for such a large economy, while hostilities in southern Ukraine have block most of its exports from ports on the Black Sea.
Additional report Reuters
https://www.independent.ie/business/world/the-cost-of-the-nickel-in-a-british-10-pence-piece-is-now-much-more-than-the-value-of-the-coin-itself-41425879.html The price of nickel in the UK 10 pence note is now much higher than the value of the coin itself