According to the London Metal Exchange (LME), market acceptance of crude nickel powder as a delivery material for LME nickel is generally supportive, but packaging challenges are also noted.
The LME is looking to expand the range of products that can be delivered with the formed coal and cathode contracts to improve the condition of its nickel contracts. Trading in nickel has slumped since March 2022, when market chaos caused prices to more than double in a matter of hours and the LME had to suspend trading for more than a week.
The LME said it would conduct a more detailed study of packaging solutions for crude nickel powder before moving forward with the proposal. The idea is part of the LME's plan, launched in March 2023, to address low inventory levels and improve liquidity in electronic trading.
The LME also said it had received an application for approval for the "Gem-ni1" brand of nickel produced by China Jingmen Gemstone Co LTD to be delivered under its nickel contract.
However, analysts estimate that the amount of nickel powder available is too small to boost the volume of nickel contracts. Increased production of nickel powder may come at the expense of coal briquettes. Coal briquette is a more liquid product that can be delivered under the LME's nickel contract.
One nickel producer said that if more powder was produced, it would reduce the production of briquettes. They expressed uncertainty as to how liquidity would be supported by the inclusion of crude nickel powder in the approved list.
