(Adds comment by Trafigura, background)
March 17 (Reuters) - The London Metal Exchange (LME) on
Friday postponed the resumption of nickel trading during Asian
hours by a week to March 27 after it found nickel that failed to
meet contract specifications at an LME warehouse.
The move is another blow to the world's oldest and
biggest industrial metals market, which had been counting on a
restart of Asian trade to boost liquidity in a contact that has
been struggling since a nickel crisis a year ago.
The LME said it had cancelled nine nickel warrants - an
ownership document for metals placed in an LME-approved
warehouse - at one warehouse facility, without naming it.
"The exchange has received information that a number of
physical nickel shipments out of one specific facility of an
LME-licensed warehouse operator have been subject to such
irregularities," the statement said.
The announcement further undermines trust in the global
nickel trade after trader Trafigura last month alleged that it
discovered "systematic fraud" in shipments that did not contain
nickel and begun legal proceedings against Indian businessman
Prateek Gupta and his companies.
"We do not own any of the nine warrants that have been
invalidated by the LME," Trafigura said. There is no connection
with Trafigura's legal action against Gupta either, it added.
A spokesperson for Gupta has said that they were
preparing "a robust response" to the allegations.
As each warrant equals about 6 tonnes, 54 tonnes were
affected. The LME said the non-conformant warrants represent
0.14% of live nickel stock in its warehouses.
The 146-year-old LME said the issues with nickel related to
bagged nickel briquettes, which were found to not have the
correct weight.
It did not name the warehouse or its location.
The bags in question were at a warehouse owned by Access
World in Rotterdam and contained stones instead of the nickel,
Bloomberg reported, citing sources familiar with the matter.
The LME declined to comment on the Bloomberg report and
Access World did not immediately respond to an emailed request
for comment.
The exchange said it had no reason to believe that any
other LME facility was affected, but still called on all
warehouse operators to undertake inspections of warranted
nickel. To give them time to do that, it is postponing the
reopening of Asian trading.
(Reporting by Deep Vakil and Bharat Govind Gautam in Bengaluru
and Eric Onstad and Polina Devitt in London; Editing by Mark
Porter)
