LME nickel volumes plunge with exchange still hostage to March trading fiasco

By Pratima Desai

LONDON – The quantity of nickel traded on the London Metallic Trade (LME) dropped greater than 40% in July as funds, customers and producers continued to shun the market – months after commerce was suspended for greater than every week in March as costs dramatically spiked.

Merchants say many earlier contributors of the market fear they might be buffeted by value volatility once more, whereas others consider the kind of nickel traded on the LME is not consultant of the worldwide market.

The world’s oldest and largest marketplace for industrial metals cancelled billions of dollars in trades on March 8 after costs spiked by greater than 50% in a matter of hours to a file above $100,000 a tonne.

Common every day LME traded nickel volumes fell to 34,962 tons or 209,772 tonnes in July, down practically 42% from the identical interval final yr. In January and February nickel volumes rose greater than 22% and 23% respectively.

“Volumes are down usually (on metals markets) partly due to international slowdown, however nickel has an additional burden,” a metals dealer at a pure assets fund mentioned. “Individuals are nonetheless nervous about buying and selling it on the change.”

Sliding volumes and open curiosity — the variety of excellent contracts as a result of mature or be rolled over on the subsequent settlement date — imply low liquidity, which might exaggerate value strikes.

“We've low volumes and open curiosity and a market that's turning into extra illiquid by the day,” a nickel dealer mentioned, including that illiquidity had pushed away some fund enterprise.

The chaos in March and a way that the LME contract not represents the nickel market have meant many customers and producers are avoiding the change, merchants say.

In response to Macquarie analyst Jim Lennon, nickel that may be traded on the LME quantities to round 600,000 tonnes or 19% of world provides at greater than 3.1 million tonnes this yr.

The rest is nickel pig iron and ferro nickel used to make stainless-steel. Nickel can also be a key materials for the batteries that energy electrical automobiles.