LME explores potential need for class 2 nickel reference pricing
Oliver Wyman nickel review to be published in Dec
(Adds details, quotes, background)
By Mai Nguyen
SINGAPORE, Nov 28 (Reuters) - The London Metal Exchange (LME) hopes to resume trading of its nickel contract during Asian hours within the next two weeks, an executive said on Monday.
The world's largest and oldest forum for trading metals, the LME was forced to suspend the nickel market and cancel all trades on March 8, after prices spiked more than 50% to hit a record above $100,000 a tonne within a few hours.
"We're very, very determined in focusing on helping rebuild liquidity in our nickel contract," Robin Martin, its head of market development, told the LME Singapore Forum.
"We hope to be able to re-introduce trading of our nickel contract during Asian hours as soon as within the next two weeks."
Nickel trading resumed on March 16, when the LME introduced daily price limits, but not during Asian hours.
The debacle was the biggest crisis to hit the exchange, as the suspension left consumers and producers without key benchmark prices and damaged the reputation of the 145-year-old organisation.
"We absolutely do not take our role in this industry for granted and realise that the LME has a lot of work to do to rebuild confidence in our market," Martin said.
In June, the exchange said it had appointed management consultants Oliver Wyman for an independent review of the March incident.
"This review is now close to being finalised and will be published next month," Martin added.
The LME is also exploring appetite for class 2 nickel price referencing.
"We're also discussing with market participants around the potential need for alternative for reference pricing sources for class 2 nickel material, be that nickel pig iron (NPI), ferronickel or nickel sulphate."
The LME nickel contract prices high grade, class 1 nickel.
However, the majority of volume traded these days is class 2 nickel, in the form of lower grade materials such as NPI, ferronickel, mostly produced in Indonesia, or nickel sulphate.
Global demand for nickel, used in batteries for electric vehicles, is expected to surge towards the end of the decade, as the world adopts green energy and electric vehicles. (Reporting by Mai Nguyen in Singapore; Editing by Muralikumar Anantharaman and Clarence Fernandez)