The LME has lost its status as a benchmark for an important part of the nickel market to the Shanghai Metals Market index, a major blow considering the ongoing legal troubles and decreased use of the LME as a benchmark for Class II nickel.
After falling over 14% throughout May,
While highly correlated, over 86% since 2012, LME nickel and Chinese nickel sulfate prices sit at a considerable delta between on another. Source: The nickel market has become increasingly bifurcated amid a supply boom of less pure forms of nickel from Indonesia. Meanwhile, the LME price only reflects pure nickel ore, also known as Class I nickel. According to Bories, the nickel pig iron and nickel sulfate markets have also reportedly started to use indexes.
, are typically calculated by the price of various alloying elements. Western producers currently use the LME nickel price as part of this calculation, which insiders say is unlikely to change anytime soon. While stainless steel prices won’t see an impact, the state of the LME’s nickel contract already has and it will continue to do so for the foreseeable future. In February 2022, average daily trading volume and open interest sat at around 7,140 and 236,905, respectively.
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