LME inventories low for industrial metals


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The London Metal Exchange will enter 2023 with the smallest available warehouse stockpiles in at least 25 years, setting the stage for future squeezes and spikes if demand turns out stronger than expected.

Available inventories of the six main metals traded on the LME plunged by two thirds in 2022, with aluminum’s 72% decline accounting for the bulk of the drop, while zinc shrank by 90%. Collectively, inventories not already marked for withdrawal hit the lowest level in data going back to 1997 on Thursday, and finished the year only fractionally higher.

The London Metal Exchange needs to overhaul how it oversees live trading to prevent another market collapse after it was forced to cancel $4 billion in nickel trades, a report into the fiasco says.

The exchange needs to improve its risk and control functions and upgrade its volatility controls, according to consultants Oliver Wyman, who were commissioned by the LME to review what caused the March 2022 crisis in the nickel market.

The exchange cancelled $4 billion in trades on March 8 after a short squeeze stemming from a position held by Chinese steel manufacturer Tsingshan sent nickel prices soaring by more than 240%.

The move erased an estimated $1.3 billion of gains for long position holders. In the aftermath of the incident, nickel trading was suspended for more than a week.

Oliver Wyman investigated the events that led up to the breakdown, including the growing threat of sanctions on Russian nickel producers and low nickel warehouse stocks. Following the invasion of Ukraine on Feb. 24, nickel prices rose in line with other metals, and bid-ask spreads remained at typical historical levels, it found.

But “large short positions had been built-up by a number of participants long before concerns over the invasion of Ukraine surfaced,” the report said. “Two positions, both with significant [over the counter] components, were particularly large in relation to the financial resources of their owners.”

Large short positions you say? Where have I heard that before? ...
The LME stores Russian metal in South Korean warehouses?

LONDON, Feb 17 (Reuters) - Another year, another nickel scandal as the devil's metal lives up to its reputation.

When German miners first came across the stuff in fifteenth century Saxony, they dubbed it "Kupfernickel," or "Devil's Copper" because it looked like copper but wasn't.

Appearances can be deceptive when it comes to nickel, as Trafigura has just found out half a millennium later.

The commodity trader will take a $577 million charge in the first half of 2023 against potential losses arising from what it called a "systematic fraud" involving cargoes of nickel that were not nickel.

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At this rate, "dont take any nickel Nickels" is going to be as wise as warning young folk not to take wooden Nickels.
LONDON, June 19 (Reuters) - A lawsuit brought by Elliott Associates and Jane Street Global Trading against the London Metal Exchange (LME) for cancelling nickel trades during chaotic trading in March 2022 will be heard in a London court on June 20-22.

On March 8, 2022 nickel prices more than doubled in a matter of hours to a record above $100,000 a tonne, prompting the exchange to suspend trading for the first time since 1988 and cancel all nickel trades on that day.


LONDON, June 23 (Reuters) - The first part of the London Metal Exchange's (LME) courtroom drama is over after three days of legal argument at London's Royal Courts of Justice.

The LME, owned by Hong Kong Exchanges and Clearing (0388.HK), now awaits judgment on whether its cancellation of nickel trades on March 8 last year was lawful.

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