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City of London

London Metal Exchange Sees Trader Exodus as Open Interest Slides

  • Open positions across LME dropped more than 8% since March 8
  • About $6 billion of nickel positions liquidated in two weeks
Traders, brokers and clerks on the trading floor of the open outcry pit at the London Metal Exchange, in London, U.K.

Traders, brokers and clerks on the trading floor of the open outcry pit at the London Metal Exchange, in London, U.K.

Photographer: Chris J. Ratcliffe/Bloomberg

Traders and investors are rapidly cutting exposure to the London Metal Exchange after this month’s nickel-market chaos, driving open interest to a 15-year low and leaving key metals exposed to wild price swings as liquidity shrivels.

The number of open positions across the LME’s six main metals fell more than 8% in the two weeks after the exchange suspended trading in nickel and canceled billions of dollars worth of transactions on March 8. Investors have queued up to unwind their nickel positions since the market reopened, and the chaos has spilled over into other markets too, with aluminum and zinc exposure dropping sharply.