For the second day in a row, Nickel traded in London surged by the 15% exchange limit on the scandal-plagued London Metals Exchange, putting the spotlight back on bearish position holders just two weeks since the market was roiled by an historic short squeeze, and sparked speculation that a second, even more vicious short squeeze may be forming.

Nickel futures remained locked at the price limit by late morning on the London Metal Exchange, as the latest spike extends a period of unprecedented turmoil for the market. Prices soared over 250% over two trading sessions in early March during the short squeeze centered on China's Tsingshan Holding Group Co., before the market was suspended to avoid bankrupting China's biggest stainless steel producer and potentially leading to billions in losses for its OTC counterparties, among which JPMorgan was the largest.

As we reported last week, Tsingshan struck a deal with its banks to avoid further margin calls, allowing the market to reopen last week, and said it would reduce its short position in the future. But the sharp two-day jump will be piling pressure on its banks and brokers who have to make margin calls of their own to cover short positions on the LME when prices rise.

Speaking to Bloomberg, Michael Widmer, head of metals research at Bank of America, said that "ultimately the short position is still out there, and they will have to close it out" adding that sharp daily price moves are likely to continue "at least until the short position is out of the market."

And sure enough, in a separate report from Bloomberg today, we learn that Xiang "Big Shot" Guangda, the owner Tsingshan, bought some contracts on the London Metal Exchange to reduce his short bet as the nickel market briefly unfroze this week.