The London Metal Exchange (LME) said on Friday it had received the first application to approve a new nickel brand for delivery against its nickel contract since it cut the waiting time for listing to three months from six to nine months in March.
The 146-year-old exchange has struggled to revive nickel volumes since prices jumped to a record above $100,000 a tonne in disorderly trade in March 2022, forcing the LME to suspend the nickel market for the first time since 1988.
Many nickel consumers, producers and traders who abandoned the market in the aftermath are yet to return partly because of price volatility, which is restrained by daily price limits imposed by the world’s largest and oldest forum for metals trading.
At the end of March, the LME, owned by Hong Kong Exchanges and Clearing (HKEx), announced measures to address low inventory levels and boost liquidity in electronic trading.
The LME said it had received an application to approve nickel produced by Quzhou Huayou Cobalt New Material Co, a subsidiary of China’s Zhejiang Huayou Cobalt Co, as a list brand.
“It’s a start and could help with liquidity of the contract, but it’s not going to be a game changer,” a trader said. “Stocks need replenishing, it’s going to take more than one new brand for that to happen.”
The LME said it expects more fast-track applications in coming months.
Nickel inventories in LME registered warehouses at 37,230 tonnes are at their lowest since 2007.
Part of the problem is that the nickel market is now dominated by nickel pig iron (NPI), a lower grade nickel used mostly by stainless steel producers, which cannot be delivered against the LME’s contract.
NPI is expected to amount to more than 50% of global supplies estimated at 3.2 million metric tons this year compared with the 18% that can be delivered against the LME’s contract, according to Macquarie analyst Jim Lennon.
The LME said in March it would work with China’s Qianhai Mercantile Exchange to introduce a new Class II nickel spot market in China.
(By Polina Devitt and Pratima Desai; Editing by Louise Heavens and Kirsten Donovan)