(Yicai Global) March 15 -- Nickel futures prices will probably slide when the London Metal Exchange resumes trading today after a five-day suspension due to wild fluctuations in the price of the metal. Analysts, though, say it is hard to tell what the long-term movements will be.

“There are different opinions between going long and going short,” said Zhan Dapeng, director of nonferrous metals at Everbright Futures. Prices will most likely weaken after opening, but after that there are all sorts of possibilities, he added.

“The LME plans to reopen the market as it considers the risk to have been resolved. It has also set circuit breakers to prevent the recurrence of risks,” Wang Yanqing, a metal futures analyst with China Securities, told Yicai Global.

The LME nickel prices are likely to drop, but because of the newly introduced exchange-imposed limit they won’t fall to yesterday’s price of CNY224,000 (USD35,000) per ton on the Shanghai Futures Exchange, Wang said.

Should the LME open at USD50,300 per ton, it is still a big difference from that of the Chinese bourse and may further push up nickel prices in Shanghai, Zhan said. Investors should wait and see to avoid risks before the LME’s nickel issue cools, he added.

Trading of all nickel contracts was halted in London on March 8 after prices surged almost three and a half times from the day before to USD101,365 a ton. It was the first time that the London exchange had suspended a metal market since 1985.

Unlike the Shanghai bourse, the London Metal Exchange did not have circuit breakers in place that help to prevent wild swings in prices, slowing down the impact and giving investors time to process information and implement risk control strategies.

This is no longer the case. The LME will limit the price fluctuation on nickel contracts to within 5 percent of the closing price the previous day. And all other base metals will have a 15 percent trading limit.

At the center of the commodities maelstrom last week was China’s Tsingshan Holding Group, which found itself squeezed by the leap in prices and unable to meet deliveries for an estimated short position of 200,000 tons of nickel. Today the world’s second-biggest nickel producer said that it has reached a standstill agreement with banks on its existing positions on the LME and that they will guarantee loans until nickel prices return to a certain level.

Editor: Kim Taylor