LME postpones resuming Asian nickel trading after 'irregularities'

The London Metal Exchange (LME) on Friday postponed the resumption of nickel trading during Asian hours by a week to March 27 after it found nickel that failed to meet contract specifications at an LME warehouse. The move is another blow to the world's oldest and biggest industrial metals market, which had been counting on a restart of Asian trade to boost liquidity in a contact that has been struggling since a nickel crisis a year ago.

The London Metal Exchange (LME) on Friday postponed the resumption of nickel trading during Asian hours by a week to March 27 after it found nickel that failed to meet contract specifications at an LME warehouse.

The move is another blow to the world's oldest and biggest industrial metals market, which had been counting on a restart of Asian trade to boost liquidity in a contact that has been struggling since a nickel crisis a year ago. The exchange did not say whether the problem at the warehouse was linked to a case in which commodity trader Trafigura alleged that it discovered "systematic fraud" in nickel shipments that did not contain the metal.

The LME said it had cancelled nine nickel warrants - an ownership document for metals placed in an LME-approved warehouse - at one warehouse facility, without naming it. "The exchange has received information that a number of physical nickel shipments out of one specific facility of an LME-licensed warehouse operator have been subject to such irregularities," the statement said.

As each warrant equals about 6 tonnes, 54 tonnes were affected. The LME said the non-conformant warrants represent 0.14% of live nickel stock in its warehouses. The 146-year-old LME said the issues with nickel related to bagged nickel briquettes, which were found to not have the correct weight.

The exchange said it had no reason to believe that any other LME facility was affected, but still called on all warehouse operators to undertake inspections of warranted nickel. To give them time to do that, it is postponing the reopening of Asian trading. Trafigura has alleged in a case being brought at London's High Court that companies linked to Indian businessman Prateek Gupta substituted other materials for nickel it had bought.

The firm booked a $577 million charge linked to the issue for the first half of 2023. A spokesperson for Gupta has said they were preparing "a robust response" to the allegations.

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