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By Pratima Desai, Zandi Shabalala and Eric Onstad
LONDON (Reuters) -The London Metal Exchange had hoped to get the global market for nickel motoring again on Wednesday after a week in limbo. It didn't work out as planned.
The world's oldest metals exchange was forced to halt trading on its electronic system within a minute of opening due to a technical glitch and when it resumed in the afternoon there were very few trades.
The shambolic reopening piled more pressure on the LME, which is already facing a hail of criticism for suspending the market after a wild spike in prices last week left some traders facing billions of dollars in losses.
LME nickel prices are used as a reference for deals between end users of the metal and producers, and the disorderly market resumption left some traders questioning whether participants might look for alternative venues.
"This is difficult for the market and all its participants," said Michael Widmer, head of commodities research at Bank of America.
"If you are pricing off the LME contract but you don't have a reference price, if you are buying your raw materials on an LME price, if you have to manage your cash flows - it's difficult," he said.
By 1625 GMT, the LME's three-month nickel contract had traded just 249 lots, or 1,494 tonnes, on track to be the slowest day since November 2006.
On March 7, 26,150 lots, or 156,900 tonnes, changed hands.
The LME nickel market was suspended a day later after China's Tsingshan Holding Group bought large amounts of nickel, propelling the metal up more than 50% in a matter of hours to a record above $100,000 a tonne, sources have said.
To prevent wild price swings when trading resumed on Wednesday, the LME introduced limits of 5% above or below an adjusted closing price of $47,986, but technical issues allowed some trades to go through under the lower limit of $45,590.
The exchange said trades executed on the LMEselect system at the lower limit would remain, but any below would be cancelled.
"What a mess. It's embarrassing; disorderly doesn't even begin to describe it," one metals trader said. "People will start thinking about moving away from the LME."
The turmoil has forced the LME to widen its nickel trading limit to 8%, adding it could adjust the limits on nickel and other metals further depending on market conditions.
'COMPLETELY DISLOCATED'
The price of nickel, which is used to make stainless steel and is a key material for electric vehicle batteries, had been rising steadily even before the conflict in Ukraine ramped prices up even further and triggered last week's chaos.