The London Metal Exchange (LME) has approved the listing of the first Indonesian brand which can be delivered against the exchange’s primary nickel contract, it said on Thursday, strengthening the selling power of the world’s largest miner.
Indonesia has become a new powerhouse of global nickel production in recent years but until now has not produced significant amounts of the metal in the high-purity form traded on the LME, the world’s largest and oldest metals trading venue.
After the approval, the DX-zwdx brand produced by a plant of Indonesia’s PT CNGR Ding Xing New Energy can be delivered against the LME’s nickel contract with immediate effect, the LME statement said. The plant has annual capacity of 50,000 metric tons.
The exchange, owned by Hong Kong Exchanges and Clearing Ltd, has been adding new nickel brands since it cut the waiting time for listing as part of its program to revive nickel trade volumes after the 2022 crisis.
The crisis happened in one day in March 2022 when prices more than doubled in a few hours in a disorderly market, prompting the exchange to suspend trading for more than a week. Nickel trade volumes slumped but have partly recovered.
New brands help to increase the liquidity of stockpiles in the LME-registered warehouses. Those nickel stockpiles have risen by more then twofold over the last 12 months to 84,042 tons, the highest since February 2022.
The approval of the Indonesian brand indicates increased competition for other producers of LME-deliverable nickel, as other local firms start converting Indonesia’s low-grade ore into LME-standard Class 1 metal.
Benchmark prices for nickel, which is used in stainless steel and electric vehicle batteries, fell by 45% in 2023 due to a surplus created by rising output of different types of nickel products in Indonesia.
The contract is up 22% so far this year as Indonesia reviews applications for mining quota approvals, and some loss-making producers mothball or reduce output.
(By Polina Devitt; Editing by David Goodman, David Evans and Jan Harvey)
