Investment Insights. Stay Ahead.

Trading volumes down as potential competitors close in on London Metals Exchange nickel contract

Trading volumes for the London Metals Exchange (LME) nickel contract remain significantly below averages since the suspension of the LME’s nickel contract 18 months ago.

The latest volumes highlight the LME’s challenge in regaining trust and confidence after they suspended in nickel for the first time since 1988, when prices surged 250% in March 2022, to over US$100,000/tonne, within hours.

And competitors are reportedly starting to plot ways to replace the oldest and largest metals market — a cornerstone of the global nickel market estimated to be worth US$38.44 billion in 2023.

London Metals Exchange LME nickel primary 3 month trading volumes - The Oregon Group - Investment Insights

According to a Reuters report, the Shanghai Futures Exchange (ShFE) is looking into the potential launch of nickel futures for international use, including providing international firms access to the nickel contracts on its International Energy Exchange (INE), where commodities such as copper, crude oil and rubber are traded in yuan.

Shanghai Futures Exchange SHFE active nickel contract open participation - The Oregon Group - Investment Insights

Another potential competitor, CME Group, is reportedly looking to launch a nickel contract that would settle against prices gathered from a platform to be launched by British-based Global Commodities Holdings (GCH). However, they have also told the Financial Times that they are not planning to launch a nickel contract to rival the LME.

In Singapore, a new commodities exchange, Abaxx, plans to launch a nickel sulphate contract, the world’s first for a type of nickel used to make the lithium-ion rechargeable batteries that power electric vehicles. The move comes as markets expect a significant tightening of nickel Class I.

In response, the LME is moving ahead with changes to how it sets its end-of-day prices, in an attempt to boost transparency and trust.

Our analysis on whether the London Metal Exchange nickel contract can survive:

Can the London Metal Exchange nickel contract survive?

Disclaimer

The Oregon Group has full editorial control over all content published on this website and the author has not been compensated or remunerated by any person to provide content for The Oregon Group, and all statements and expressions herein are the sole opinion of The Oregon Group. However, from time to time, The Oregon Group and its directors, officers, partners, employees, authors, or members of their families, as well as persons who are interviewed for articles on this website, may have a long or short position in securities or commodities mentioned and may make purchases and/or sales of those securities or commodities in the open market or otherwise. By accessing and using this website, readers are cautioned to assume that each of the foregoing persons may have a financial interest in all companies and sectors mentioned on this website. Any projections, market outlooks or estimates herein are forward looking statements and are inherently unreliable., and any such statements are based upon certain assumptions and should not be construed to be indicative of the actual events that will occur. Other events that were not taken into account may occur and may significantly affect the returns or performance of the securities or commodities discussed herein. The information provided herein is based on matters as they exist as of the date of preparation and not as of any future date, and The Oregon Group undertakes no obligation to correct, update or revise the information in this document or to otherwise provide any additional material. The information provided on this website is for informational purposes only and is not, directly or indirectly, an offer, solicitation of an offer and/or a recommendation to buy or sell any security or commodity, and the information provided on this website should not be construed as any advice or an opinion as to the price at which the securities of any company or commodity may trade at any time. The Oregon Group is a publisher of financial information, not an investment advisor. We do not provide personalized or individualized investment advice or information that is tailored to the needs of any particular recipient, and the information provided on this website is not and should not be construed as personal, financial, investment or professional advice. Readers are cautioned to always do their own research and review of publicly available information and to consult their professional and registered advisors before purchasing or selling any securities or commodities and should not rely on the information contained herein. Neither The Oregon Group nor any of its affiliates accepts any liability whatsoever for any direct or consequential loss howsoever arising, directly or indirectly, from any use of the information contained herein. By using the Site or any affiliated social media account, you are indicating your consent and agreement to this disclaimer and our terms of use. Unauthorized reproduction of this newsletter or its contents by photocopy, facsimile or any other means is illegal and punishable by law.