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☆ Exclusive: CME to launch nickel contract using prices from new platform -sources
▼ + stars: | 2023-02-22 | by ( Pratima Desai | ) www.reuters.com time to read: +3 min

CME want a nickel contract, they are planning to base it on traded prices on GCH's physical platform," one of the sources with direct knowledge of the matter said. In response to a request for comment, CME said: "We cannot comment on whether we are developing any particular product." Nickel industry sources said illiquidity meant LME nickel prices often did not represent the fundamentals of the market. "There aren't really any alternatives to the LME contract at the moment and the market needs a liquid contract. Using ShFE's nickel contract is difficult for non-Chinese firms as they need to be affiliated with a local entity and because it is priced in yuan.

Power-hungry aluminium producers in Yunnan and neighbouring provinces were already operating at reduced capacity, some of them since September, dragging down China's national output. The latest cuts will impact around 740,000 tonnes of annual production capacity, adding to the million tonnes already offline, according to industry consultancy Mysteel. Aluminium capacity has grown to around 5.25 million tonnes, making it the fourth largest provincial producer after Shandong, Inner Mongolia and Xinjiang. January's estimated annualised production was 40.50 million tonnes, a drop of almost one million tonnes over the last five months. Registered inventory on both exchanges has risen fast, cushioning the supply chain from the loss of Chinese production momentum.

Surging Shanghai metal stocks have injected an element of doubt into the bull narrative and the LME Index is now showing year-to-date gains of only 3% after a February pull-back. Shanghai Futures Exchange stocks of aluminium, copper and zincSEASONAL SURGEMetals bulls have been nervously watching the fast build in Shanghai Futures Exchange (ShFE) stocks over the past few weeks. Copper stocks have grown equally dramatically, from 69,268 tonnes to 242,009 tonnes over the same period. It is currently assessed by Shanghai Metal Market at a bombed-out $22.50 a tonne, down from an October high of $152.50. WAIT AND WATCHIt's difficult to say until China's seasonal stocks pattern plays out in full.

China's own production of refined tin was flat year-on-year at 165,900 tonnes in 2022, according to Shanghai Metal Market. ShFE tin price, market open interest and stocksSHIFT IN POSITIONINGWhile China has reshaped tin's fundamental picture, the price recovery has forced an equally significant shift in fund positioning. Investment funds turned net short on the LME tin contract in September as the price was imploding. Tin market open interest collapsed from 102,106 to 71,218 contracts in the week before the Lunar New Year holidays, indicating a big clean-out of short positions. GOLDILOCKS PRICEThe tin price is now in the Goldilocks zone, not high enough to frighten off physical users, and not low enough to threaten existing supply.

Currently trading around $9,130, the copper price is up by 9.6% since the start of January. Investors played copper from the short side for much of last year, if they were prepared to engage at all. The funds' sudden return is a sign that many are betting on a much sunnier outlook. "To the degree these short positions have not already covered, this may support copper in the short term", the bank said. It's clear, though, that copper long positioning is primarily a bet on Chinese recovery, underpinned by measures to revitalise a foundering property sector and more metals-intensive green infrastructure.

It's the lowest end-year inventory in the system this century and reflects two years of steady withdrawals which have left exchange stocks of metals such as zinc and lead almost depleted. It's no coincidence that all the LME base metals have experienced bouts of extreme tightness over the last couple of years. Zinc stocks were down by 65% and lead stocks down by 59% on December 2021. LME stocks could desperately do with any sort of rebuild, whether seasonal or cyclical. So far, however, significant arrivals remain conspicuous by their absence and until that changes, low visible inventory is going to keep roiling the LME base metals.

☆ Exclusive: UK watchdog blocks LME plan to restart Asian hours nickel trade-sources
▼ + stars: | 2023-01-11 | by ( Pratima Desai | ) www.reuters.com time to read: +2 min

The world's largest metals trading exchange was forced to suspend all nickel activity for eight days in March 2022, after prices spiked more than 50% during Asian trading hours to hit a record above $100,000 a tonne. Volumes and liquidity on the LME have collapsed since then, partly due to the continued suspension of nickel trade in the Asian time zone. The LME had said on Nov. 28 that it hoped to resume trading during Asian hours within two weeks. "The regulator wants the LME to monitor nickel trading and make sure volatility is contained. "The regulator needs to be sure that if Asian hours nickel trade was to resume, supervision is effective.

Although commanding a weighting of just 0.936%, lower than any other industrial metal, lead is included in the Bloomberg Commodity Index (BCOM) for the first time this year. LME lead three-month price, stocks and spreadsSTOCKED OUTLME lead stocks fell by 54% to 25,150 tonnes over the course of last year. The distribution of LME warehouse stocks says a lot about the underlying stresses in the physical supply chain. China has emerged as a supplier of last resort to a stretched Western market. REBALANCINGThe lead market that has been trying to rebalance for two years and the return of Nyrstar's Port Pirie smelter in Australia after three months of maintenance should help.

LONDON, Jan 6 (Reuters) - March 2022 will go down in the history books as the moment the global nickel market broke down. The search is on for a new nickel price discovery process. Global Commodities Holdings (GCH) thinks it has a solution, a blast from the LME's own distant past that could have far-reaching consequences for industrial metals trading. This is self-evidently true of the LME nickel contract, which simply could not absorb the scale of short positions accumulated by China's Tsingshan Group. It may not just be nickel players keeping a close eye on GCH's proposed new metals pricing solution.

☆ Analysis: Turbulence still haunts LME nickel, months on from trade debacle
▼ + stars: | 2022-12-12 | by ( Pratima Desai | ) www.reuters.com time to read: +5 min

Months after turbulence highlighted shortcomings in LME oversight, the nickel contract remains broken. Declining liquidity, together with low stocks, has led to high LME nickel prices this year, pushing up costs for industrial users already grappling with surging inflation. LIQUIDITY SLUMPSMany investors, traders, consumers and producers have abandoned LME nickel in the aftermath of the chaos in March. LME nickel typically trades at a discount to the Shanghai Futures Exchange (ShFE) contract because China is a net importer of nickel and the ShFE nickel price takes into account logistical costs and local taxes. "There's a major disconnect between LME nickel (futures) and the physical market," a nickel trader said.

LONDON, Dec 6 (Reuters) - The world is going to need another 50,000 tonnes of tin per year by 2030 to meet a looming surge in demand, according to the International Tin Association (ITA). The country exported 75,000 tonnes of refined tin last year with shipments running 8% higher through the first 10 months of this year. State producer PT Timah needs around two years to develop its existing tin chemical facility and longer to secure markets, Alwin Albar, chairman of the Association of Indonesian Tin Exporters, told a parliamentary hearing. China imported 22,600 tonnes of refined tin in the first 10 months of the year with Indonesian metal accounting for 19,000 tonnes. After peaking at 5,160 tonnes in September, headline LME tin stocks have fallen to 3,075 tonnes with 535 tonnes awaiting physical load-out.

LONDON, Nov 17 (Reuters) - London Metal Exchange (LME) nickel trading has turned wild again this week. LME and ShFE nickel contracts price and volumeVOLATILITY TRAPThe fund exodus after March has left a liquidity vacuum and a self-reinforcing volatility trap in the nickel market. ("A financially constrained physical market", April 3, 2022)LME nickel trading volumes have fallen steeply since March. Year-to-date nickel volumes are 24% below last year's equivalent period, the scale of decline flattered by strong trading activity in January and February. But until inventory and volumes rebuild, time-spread turbulence and perma-backwardation are becoming the new normal in the Shanghai market.

ShFE stocks, bonded warehouse stocks and Yangshan premiumSHANGHAI SQUEEZEThe ShFE copper contract has been characterised by low inventory and rolling tightness for some time. It is probable that troubled trade house Maike Group is also somehow in the Shanghai copper cocktail right now. LONDON'S RUSSIAN DILEMMAChina's strong call on copper is being felt in London, where falling LME stocks have rekindled time-spread volatility. The micro-macro divergence looks set to accentuate as LME stocks are stripped for shipment to China. Over 60% of LME copper stocks at the end of September were Russian metal.

Indonesian nickel production by mine and productPOWERING UPIndonesia's nickel boom reflects both the country's rich mineral resources and the government's drive to push miners down the value-add processing chain. China's imports of nickel by product 2020-2022PRICING DOWNThis Indonesian supply surge was widely expected, but its exact timing was fuzzy given the number of new processing routes being used to convert ore to battery nickel. The combination of European demand shock, Indonesian production burst and the closing of the processing gap between stainless and battery nickel means there "is close to 30% downside for the nickel price into year-end". This mismatch of market-place and market is one of the reasons the LME nickel contract melted down in March. Macquarie Bank now provides three different nickel price forecasts for LME refined metal, Chinese nickel pig iron and Chinese nickel sulphate.

☆ London copper price hits two-month low on strong dollar
▼ + stars: | 2022-09-26 | by ( Reuters Staff | ) www.reuters.com time to read: +1 min

(Reuters) - London copper prices hit a more than two-month low on Monday, as a stronger dollar made greenback-priced metals more expensive to holders of other currencies. FILE PHOTO: A worker checks copper wires at Truong Phu cable factory in northern Hai Duong province, outside Hanoi, Vietnam August 11, 2017. LME aluminium hit an 18-month low of $2,151 a tonne, zinc eased 0.4% to $2,995.50 a tonne by 0326 GMT while tin rose 1.5% to $20,540 a tonne. The most-traded October copper contract on the Shanghai Futures Exchange declined 2.7% to 60,840 yuan ($8,500.17) a tonne. ShFE nickel dropped 3.1% to 188,620 yuan a tonne, tin fell 3.1% to 178,510 yuan a tonne, aluminium declined 1.9% to 18,380 yuan a tonne and zinc was down 2.2% to 24,430 yuan a tonne.

LONDON, Sept 21 (Reuters) - London Metal Exchange (LME) warehouses saw 11,200 tonnes of copper arrivals on Tuesday, the largest single-day warranting since June. LME inventory remains ultra-low by any historical yardstick, representing just two days' worth of global usage. At their peak of 175,000 tonnes in February last year they dwarfed registered LME copper inventory of 74,000 tonnes. Registered exchange stocks combined with LME shadow and INE bonded stocks represent the total statistically verifiable copper inventory landscape. Global Copper stocks, including LME Shadow and INE bonded...WHAT YOU CAN'T SEEThere is obviously more copper "out there" in the statistical dark.

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