The London Metal Exchange (LME) halted nickel trading on Tuesday after prices doubled in just hours to a record $100,000 per ton, fueled by a race to cover short positions after Western sanctions threatened supply from major producer Russia.

The rare move underscores the market panic created by Russia's invasion of Ukraine with buyers scrambling for the metal crucial for making stainless steel and electric vehicle batteries.

"The LME has taken this decision on orderly market grounds," said the LME, one of the world’s top commodity exchanges, adding it was considering a closure of several days.

It raised margin requirements for nickel contracts by 12.5% to $2,250 a tonne, effective close of business Tuesday, and suspended trading of nickel on all venues for at least the rest of the day.

"The LME will actively plan for the reopening of the nickel market, and will announce the mechanics of this to the market as soon as possible."

Three-month nickel on the LME more than doubled on Tuesday to $101,365 a tonne before the LME halted trade on its electronic systems and in the open outcry ring.

"It’s likely a big margin call prompted the suspension of trading, with sharp gains forcing speculators to scramble for additional capital to put into accounts to cover the shortfall," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

On Monday, the exchange said members with short positions, unable to deliver or to borrow metal at a backwardation of no more than 1% of the previous day's cash price, may have their delivery deferred by the exchange, aided by LME instructions.

The uncertainty caused by Russia's invasion and resulting sanctions has added to an already bullish nickel market due to low inventories.

Nickel prices have quadrupled over the past week on fears of further curbs on supply.

Russia not only supplies about 10% of the world's nickel but Russia's Nornickel is the world's biggest supplier of battery- grade nickel at 15%-20% of global supply, said JPMorgan analyst Dominic O'Kane.