LME’s proposal on coarse nickel powder needs more work on packaging

The LME is looking to expand the products that can be delivered against its flagging nickel contract alongside briquette and cathode.

Nickel volumes have slumped since March 8, 2022, when prices more than doubled in a few hours in a disorderly market prompting the exchange to suspend trading for more than a week.

The LME will conduct more detailed work on packaging solutions for coarse nickel powder before progressing the proposal further, the world’s largest and oldest metals trading venue said in a statement.

The idea about the powder is part of a program to address low inventory levels and boost liquidity in electronic trading which the LME launched in March, 2023.

It includes quick listing of new producers, one of which submitted an application, the LME said in a separate statement.

The LME also on Thursday said it had received an application to approve nickel brand “GEM-NI1” produced by China’s Jingmen Gem Co. Ltd for delivery against its nickel contract.

Many producers, consumers and traders abandoned the nickel contract in the aftermath of the 2022 crisis and are yet to come back to it because it no longer represents the bulk of the market.

So-called Class 1 metal – that can be delivered against the LME contract – amounts to only around 18% of global supplies.

The quantities of available nickel powder are too small to boost volumes of the nickel contract, according to analysts’ estimates.

The increase of their production, if any, could also be at the expense of briquette, a more liquid product in terms of end use and also deliverable against the LME’s nickel contract.

“If we produce more powder, we produce fewer briquettes. We’re not sure how adding coarse nickel powder to the approved list will support liquidity,” a nickel producer said.