LME postpones Asian-hours nickel trading after warehouse irregularities
The London Metal Exchange (LME) has postponed its planned reopening of Asian hours nickel trading to next Monday after finding irregularities in its warehouse nickel stock, Kallanish reports.
Following the trading chaos it faced last March, the exchange had stopped Asian hours trading, restoring trading during London-hours only. The plan was for Asian hours trading to reopen on Monday, 20 March, but an issue with nine nickel warrants at a licensed warehouse got in the way.
The exchange said in a note on Friday it received information that a number of physical nickel shipments “out of one specific facility” have been subject to irregularities. These relate to bagged nickel briquettes, which LME suggests could have been prevented if strict weighing had taken place.
Nine nickel warrants were found to be “non-conformant with the contract specification” and were invalidated. That corresponds to 0.14% of LME’s live stock, the exchange says, without providing details of the warehouse location and tonnage of affected metal.
Citing “people familiar with the matter,” the Financial Times said the irregularities were found at a Rotterdam warehouse operated by Access World, which was reportedly owned by Glencore until January. The report says nine bags full of stones were found replacing 54 tonnes of nickel worth $1.3 million.
LME has not confirmed such details, nor further commented on the matter.
It requested all its licensed warehouse operators to recheck stocks and warrants, while reassuring customers it has “robust rules and processes, and contractual arrangements in place with warehouse operators, to maintain oversight over LME-warranted metal and to protect the market as a whole.”
The exchange believes the invalidation of the affected warrants has removed any direct impact on its traded contracts. Yet, it adds that it makes sense to keep nickel trading to London-hours when “liquidity is stronger” in case of further events following the inspections.
Last month, Trafigura said it discovered a systematic nickel fraud by a group of companies connected to and controlled by Prateek Gupta, including TMT Metals and companies owned by UD Trading Group. The estimated $577m fraud relates to containerised nickel in transit during 2022. Denying any wrongdoing involving Trafigura, the company said then it remained committed to building its presence in the fast-growing battery metals market.
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