China's GEM applies to list nickel cathode brand on LME

Market: Metals
18/08/23

The London Metal Exchange (LME) received an application from major Chinese cathode precursor and nickel producer Green Eco-Manufacture (GEM) on 17 August to list its nickel metal brand on the exchange.

The brand name GEM has applied for is GEM-NI1. The product is full plate nickel cathode produced by GEM's facility in Jinmen city in China's central Hubei province, and has a production capacity of 10,000 t/yr.

Following independent review recommendations from management consultancy Oliver Wyman, LME eased its rules in late March to allow new Class 1 nickel production to come into its warehouse system, including offering a fee waiver for the listing of new brands and launching a "fast-track" to allow new material to be accepted after three months of regular sample assaying. These measures been taken to tackle potential delivery shortages in the wake of an extreme short squeeze in the LME benchmark nickel contract, which led to a surge in nickel prices in March 2022.

Additional supplies to the market will add liquidity and offset concerns around any structural divergence of the Class 1 and Class 2 nickel markets, given a significant increase in Asian Class 1 nickel production, according to market participants. Class 1 nickel includes nickel cathode, briquette, powder, and pellets, while Class 2 nickel mainly includes nickel pig iron and ferro-nickel.

Chinese lithium-ion battery metal and cathode active material manufacturer Huayou Cobalt's HUAYOU is the first new brand registered on the LME through the "fast-track" approach. The company applied on 9 June and obtained approval on 20 July.

Huayou also registered its HUAYOU brand nickel cathode full plate as a deliverable brand on the Shanghai Futures Exchange (SHFE)on 28 June.

GEM is also likely to seek registration of its nickel brand on the SHFE. Other new nickel cathode producers in China and Indonesia could also have the intention of applying to register new brands on the LME, market participants told Argus. This is also expected to ease potential supply shortages on these exchanges.

Argus' newly launched spot premium for Jinchuan-produced full-plate nickel cathode fell to Yn5,000-5,300/t on 17 August from Yn5,800-5,900/t on 10 August, based on SHFE's most-traded nickel contracts. The premium for imported cathode declined to Yn1,500-1,600/t from Yn1,700-2,000/t over the same period owing to sluggish demand from consumers.

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