The Nickel Mines Ltd (ASX: NIC) share price is riding an elevator to the downside on Wednesday during an unprecedented time for the commodity.
At the time of writing, the market has set fire to the nickel miner's shares, burning away 22.7% of its valuation in the process. In turn, the Nickel Mines share price is now sitting at $1.14 after hitting a new 52-week high of $1.79 only yesterday.
The most confusing part of this disappointing move is that it's occurring while nickel prices are at record highs. So, what gives?
Image source: Getty Images
What is going on with the Nickel Mines share price?
Shareholders of the $3 billion nickel company are probably scratching their heads on Wednesday as shares get pushed into an abyss. The shocking downward move in the Nickel Mines share price doesn't appear to be a consequence of an announcement.
Adding to the perplexing situation, the price of nickel hit a new all-time high overnight — breaking above US$100,000 per tonne. Most onlookers would take this as a major positive for the ASX-listed nickel company, though, it appears not to be the case.
The chart below paints the dichotomy of the situation vividly.
Instead, it seems the market is more wary than it is excited about the rocketing nickel price. Possibly due to the unprecedented nature of the situation.
The London Metal Exchange decided to cancel nickel trading altogether last night as the runaway commodity price prompts a short squeeze. This follows a curbing in western countries dealing with Russia, which is responsible for ~9% of the world's nickel production.
Analysts have conveyed expectations of further wildness in the nickel prices to come. For example, BMO analyst Colin Hamilton had this to say:
It is unlikely this is the last of extreme volatility we see in commodity markets
Meanwhile, a Bloomberg journalist shared his disbelief in the crazy scenario on Twitter yesterday, stating:
The three-month price has DOUBLED in less than 48 hours. I've been watching this market for 20 years, seen nothing remotely like this.
Now what?
Shares in Nickel Mines have been placed in a trading halt awaiting a further announcement. At this point in time, there is no indication on whether the announcement might be related to this morning's fall.
The Nickel Mines share price is now down 22% since the beginning of 2022.
