LONDON — UK-based Global Commodities Holdings (GCH) said its planned physical nickel trading platform will launch in late February, and expects it to eventually offer an alternative to the London Metal Exchange’s (LME) nickel futures contract.
Many investors, traders, consumers and producers abandoned LME nickel after chaotic trading last March saw prices double to a record above $100,000 tonnes in a disorderly market, prompting the exchange to suspend nickel trading for more than a week.
GCH lists major mining groups Glencore, Anglo American, BHP Group and Rio Tinto as shareholders, and is headed by former LME CEO Martin Abbott.
The company, which already offers a physical coal trading platform, said in December its nickel project with buyers and sellers trading directly with each other would go live in the first quarter of this year.
“We’ll get this done some time in late February,” Abbott told Reuters. “The opportunity arose with nickel… a number of the world’s largest nickel producers are already shareholders and members of the business.”
Abbott said nickel prices on the GCH platform will be used to create an index which eventually could be used to create futures that could compete with the LME contract.
GCH already has a relationship with Intercontinental Exchange (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.
“It’s not unusual for exchanges to take third party indices and use them as a settlement basis. We would anticipate there will be demand from exchanges to list the nickel index,” Abbott said.
The platform will be open to consumers, producers and merchants that are directly involved in the physical market, but not to funds that are not involved in the physical market or algorithmic traders.
It will also be open to Russian metal, which has not been targeted by sanctions imposed after Moscow invaded Ukraine. However, the decision on accepting Russian nickel will be made by the individual companies on the platform, Abbott said.
Nickel is mainly used to make stainless steel, but its role in electric vehicle batteries is growing. (Reporting by Pratima Desai; Editing by Jan Harvey)