LME Nickel 2022: One Hedge, Ten Brokers, $4B Erased │File 169 T1

This episode is part of Financial Forensics Labs — two shows, one forensic methodology: The Due Diligence Files traces how institutions collapse, The Signal Files traces how the good calls get made. Built from primary-record research by a 15-year capital markets professional. Get to know the framework, the other show, and the tools built from it — all in one place. Explore ⁠⁠⁠⁠⁠⁠⁠Financial Forensics Labs — Forensic Finance Intelligence⁠⁠⁠⁠ LME Nickel Short Squeeze 2022: how a legitimate producer hedge grew so large, split across roughly ten different brokers, that not even the exchange meant to police the whole market could see the true size of the position — until the morning it broke, and the exchange retroactively erased nearly $4 billion in trades to keep the system from collapsing.

This is the financial autopsy of the 2022 London Metal Exchange nickel short squeeze. Tsingshan Holding Group, the world's largest nickel and stainless steel producer, run by trader Xiang Guangda, built a short position of roughly 100,000 to 200,000 tonnes of nickel — far larger than its own physical production could justify as a pure hedge — spread across about ten separate banks and brokers, so that none of them could see the full picture. When Russia invaded Ukraine in February 2022, fears over Russian nickel supply sent prices climbing, and on March 8, nickel surged more than 250% in days, briefly touching an all-time high above $100,000 a tonne — the largest short squeeze in the exchange's 145-year history. Had the LME processed margin calls at that morning's price, it would have needed to collect close to $20 billion from 28 banks and brokers in a single day, more than ten times its previous record, risking a cascade of defaults through its own clearing system. The exchange halted trading and retroactively cancelled the morning's trades, wiping out profitable positions some hedge funds had locked in only hours earlier.

We trace the full week: the market's reopening on new price limits it immediately hit multiple times, the standstill agreement a consortium of banks gave Tsingshan instead of forcing a default, and the legal battle that followed — Elliott Management and Jane Street sued the LME for a combined $472 million, arguing the cancellation was unlawful. Britain's courts disagreed at every level, from the High Court in 2023 through the Court of Appeal in 2024, ruling the exchange's intervention was lawful and likely prevented a far larger "death spiral" across the metals market. Regulators separately fined the LME nearly $12 million for inadequate systems and controls, and trading volume in nickel on the exchange fell by roughly a fifth in the months that followed, never fully recovering the market's trust in it as a reliable price benchmark.

This episode is Part 1 (T1) of the LME Nickel file, the narrative account for a general audience. Part 2 (T2) breaks down the GP/LP institutional layer: the exact mechanism by which central clearing hides concentration risk, three unasked questions that existed before the crisis, and the active due diligence framework for anyone relying on an exchange as a backstop against counterparty concentration.

Financial Forensics Labs dissects the world's biggest financial collapses, fraud cases, and institutional failures — layer by layer, case by case.

Keywords: LME nickel short squeeze, London Metal Exchange, Tsingshan Holding Group, Xiang Guangda, nickel price spike 2022, commodity exchange crisis, short squeeze case study, margin call cascade, central clearing risk, Elliott Management lawsuit, Jane Street LME, exchange trade cancellation, clearinghouse default risk, commodity market structure, producer hedge risk, counterparty concentration risk, systemic risk signal, financial forensics, market structure failure, LME Clear, Russia Ukraine commodity shock, nickel market volatility, exchange governance failure, institutional due diligence,risk management framework Financial Forensics Labs