Column: New year, new nickel market after LME’s 2022 meltdown?

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Column: New year, new nickel market after LME’s 2022 meltdown? mining

Don’t look to Shanghai for an answer. The Shanghai Futures Exchange has experienced an even more pronounced collapse in activity, volumes slumping by 70% last year amid rolling time-spread volatility.Global Commodities Holdings thinks it has a solution, a blast from the LME’s own distant past that could have far-reaching consequences for industrial metals trading.GCH operates globalCOAL, a trading platform for thermal and metallurgical coal with 3,000 registered users.

A daily settlement price will be derived from physical orders and trades across the front two months for deliveries to Baltimore, Jebel Ali, Amsterdam/Rotterdam/Antwerp, Singapore, Kaohsiung, Johor, Busan and Shanghai. The minimum transaction will be 20 tonnes, equivalent to a container. The LME’s arcane trading system still bears the imprint of its genesis. The unusual three-month benchmark price was born out of shipping times for Chilean copper and Malaysian tin. The bewildering multi-day rolling prompt system evolved from the vagaries of port arrivals.

The CME has been rapidly building out its industrial metals portfolio, but curiously has never offered a nickel product.With trading activity bombed out and legal action by disaffected funds looming large, it’s hard to see how the exchange can recover any time soon its credibility as a global nickel pricing venue.

The fact that Tsingshan’s massive nickel operations don’t produce the sort of metal deliverable against the LME contract simply compounded the blow-up.

 

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