UK-based Global Commodities Holdings Ltd (GCHL) will launch its physical metals platform next month starting with nickel which will be traded for delivery in locations from Baltimore to Yokohama, the company said on Wednesday.
Traded prices from the platform will be used to create nickel indices and GCHL is working with Intercontinental Exchange to create cash-settled derivatives contracts that can be settled and cleared centrally.
GCHL started looking at the potential of a Class 1 or higher grade nickel trading platform after the crisis at the London metal Exchange (LME) two years ago, when the LME suspended nickel trading for more than a week and cancelled all nickel trades on March 8, 2022.
“There is a clear need for a properly regulated spot platform to step into disrupted or less liquid markets with a tried and tested method of facilitating trade and discovering benchmark prices that reflect industrial activity,” Martin Abbott, GCHL chief executive, said in a statement.
Abbott did not specify an exact date for the launch of the nickel trading platform, but he did say that it could be extended to other metals including those used to make electric vehicle batteries such as cobalt, manganese and graphite.
GCHL’s platform will exclude the mostly high-carbon nickel produced in Indonesia and China.
“Green is based on all sorts of things,” Abbott said.
“But we think that it addresses a concern in the marketplace because it does remove from our price discovery the Chinese nickel, much of which is made with obviously with Indonesian raw material.”
Trading membership of the platform will be restricted to companies that have physical trading activity.
GCHL already has a relationship with ICE. Its subsidiary globalCOAL owns and operates the gC NEWC thermal coal index used as the settlement price for the gC NEWC Futures contract traded and cleared by ICE Europe.
“We are exploring the potential to do this and engaging with market participants and key stakeholders on how we can deliver an alternative market structure for nickel, using GCHL’s pricing, to deliver a better model for hedging which is more adaptable to a changing supply chain,” said Chris Rhodes, president of ICE Futures Europe.
(By Pratima Desai; Editing by Jason Neely and David Evans)
