LONDON, March 21 (Reuters) - Nickel that failed to meet London Metal Exchange (LME) specifications was stored in a Rotterdam warehouse operated by Access World, the Swiss-based company said on Tuesday, adding it was inspecting bags of nickel briquettes in all locations.
The LME on Friday postponed the resumption of nickel trading during Asian hours by a week to March 27 after saying it had found problems with stored nickel, but did not identify the warehouse firm or disclose the location.
"Access World confirms it is currently undertaking inspections of warranted bags of nickel briquettes at all locations and will engage external surveyors to assist," the warehouse company told Reuters in a statement.
"In the meantime, based on internal stock checks, all information indicates that the underlying issue which led to the suspension of the 9 warrants...is an isolated case and specific to one warehouse in Rotterdam."
The LME cancelled nine warrants - title documents conferring ownership of metals stored in LME registered warehouses - or 54 tonnes of nickel.
Sources with knowledge of the matter said the bags contained stones instead of nickel. Another source familiar with the matter said the warrants were owned by U.S. bank JPMorgan (JPM.N).
The discovery further undermines trust in global nickel trade after Trafigura recently alleged that it had found "systematic fraud" in cargoes that should have contained nickel deliverable against LME contracts but did not.
Trafigura said the non-conforming nickel found by the LME had no connection with its alleged fraud.
Checking the weight of bagged nickel briquettes before warranting for delivery against LME contracts is standard operating procedure, warehousing sources say.
Owned by Hong Kong Exchanges and Clearing (0388.HK), the LME last week reminded operators in its network of more than 500 approved facilities of the strict requirement to weigh all metal before it is placed on warrant.
"There is no indication that LME rules and regulations were not followed when the material was warranted," Access World said.
The LME said last week "its other metal contracts do not allow bagged delivery, and hence are not susceptible to this type of irregularity" and that the non-conformant nickel represented 0.14% of live nickel stocks in its warehouses.
The delay of Asian nickel trading on the LME is another blow for the world's largest and oldest forum for trading metals, which was relying on the restart of Asian hours trade to boost liquidity and revive its nickel contracts, volumes of which have slumped since March 2022.
Asian nickel trading was halted following a crisis in March 2022 when the LME suspended the market for the first time since 1988 after prices jumped to a record above $100,000 a tonne in disorderly trade.
