The global nickel market could change with a new price index more favorable to producers. Just back things up. Founded by a former head of the London Metals Exchange (LME), the Global Commodities Holding platform is already enjoying great success for the coal market. The idea would be to draw inspiration for the nickel market by involving mining producers.
Alain Jeannin o Published January 14, 2023 at 02:55 am, Updated January 14, 2023 at 02:59 am
The LME-Nickel contract is still today the benchmark around which producers, users, speculators and traders set the price of a range of nickel products, from refined metal to New Caledonian ferronickel, passing through the new sulphate flow destined for batteries of electric vehicles.
The LME contract still exists, but it is weakened. Volumes have nearly halved since March, with lack of liquidity adding to continued price speculation. A solution for a new nickel pricing process is being evaluated.
LME extension
Nickel trading on the London Metal Exchange (LME) or ©LEON NEAL / AFP
Global Commodities Holdings (GCH) thinks it has a solution, referring to the distant past of the LME which could have profound consequences for nickel trading.
GCH operates globalCOAL, a metallurgical and thermal coal trading platform with 3,000 registered users.
Market members include Anglo-American, BHP, Jindal Stainless, ArcelorMittal, Glencore and Trafigura, all of which are major players in the nickel supply chain. The latter two groups are the major nickel players in New Caledonia.
GCH proposes to replicate its spot coal price indices in the nickel market with a refined metals index to be launched by the end of the first quarter.
All forms of Class I nickel will be traded on the company’s platform, including the NHC-MHP type intermediate produced by the Caledonian South plant (Prony Resources), but the spot index will be defined by briquettes and cathodes, the two physical references shapes.
NICKEL
Nickel intermediate product for batteries (NHC-MHP) produced in New Caledonia at Prony Resources or ©Nicolas Fasquel
A daily settlement price will be derived from orders and physical transactions in the first two months for deliveries to warehouses in Baltimore, Jebel Ali, Amsterdam, Rotterdam, Antwerp, Singapore, Kaohsiung, Johor, Busan and Shanghai. The minimum transaction will be 20 tons, the equivalent of a container.
GCH is led by Martin Abbott, who was the LME’s chief executive officer from 2006 to 2013. GlobalNickel, with benchmark prices of physical cargoes traded between nickel producers, steel companies and trading houses, would be a return to the origins of the LME itself.
When the London Metals Market was officially established in 1877, it was a means of pricing physical shipments of metal destined for the UK, the world’s industrial powerhouse at the time.
SLN extension
The Millennium Bridge in London. Bridge in stainless steel Spanish Acerinox and Caledonian Nickel SLN25 Eramet or ©AFP
The new nickel index would allow for a return to these fundamentals, a pricing process based on physical shipments traded between industry players with direct legitimacy to do so. They have yet to be involved in the sales process.
“With an entire industry looking for an alternative to LME prices, there should be no shortage of partners if GCH’s nickel index sees the light of day,” market analyst Andy Home said in an agency release. Reuters.
The nickel market is based on the interaction between industrial production and speculation; by strengthening the position of the producers, the new pricing solution proposed by GCH could strengthen the position and the involvement of the main world producers, including New Caledonia. It could see the light at the end of the first quarter of 2023.
LME-Nickel (class 1):
provisional price 01/13/2023 at 15:50 GMT: 27,291 dollars/tonne +1.01% (-2.91% over 5 days). Price of ferronickel: $20,000 a ton.