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Metal Miner

Metal Miner

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London Metal Exchange Explores New Nickel Contract Possibilities

  • The LME is considering introducing contracts related to Category II nickel, though not committing to a full nickel contract based on Class II, following the dramatic price surge incident in March 2022.
  • Current nickel prices on the LME have seen a decrease, with the electric vehicle sector witnessing a downturn and nickel stocks in LME-approved warehouses showing an increase.
  • CMC Poland collaborates with Danieli Automation to revamp its rolling mill, focusing on optimizing rolling performances and updating the mill's hardware, aiming to boost steel production.
Nickel

Via Metal Miner 

According to an official with the bourse, the London Metal Exchange (LME) is not ruling out the prospect of introducing contracts connected with Category II nickel. This comes despite the incident with the LME nickel contract back in March 2022.

“We are focusing on the contract as we have it,” said Robin Martin, the bourse’s business development director. “But that is not to say we are not open to doing things around Class II.” Martin made the comments on Oct. 9 at the London Metals Seminar, which was part of events connected with LME Week.

Nonetheless, Martin also indicated that the bourse does not plan to introduce a full nickel contract based on Class II. “In the wake of last year’s market events, I think a lot of people ask the question: should the LME be looking to introduce prices, products to serve the Class II market,” he said in his presentation.

“Today, we don’t see the market appetite, and we don’t see the characteristics in the Class II market, whether it is the relative size of these markets, the diversity of participants, the homogeneity and specs make it very difficult for products to be launched around Class II,” he added.

Nickel Classes in the London Metal Exchange

Class II nickel normally contains less than 99.8% nickel, while Class I contains a minimum 99.8% nickel. Generally, Class II comprises nickel pig iron and ferronickel, which commonly have a lower nickel content and are used in stainless production. Class II nickel deposits also contain laterites found in subtropical regions, such as Indonesia and the French overseas territory New Caledonia.

On the other hand, Class I nickel is primarily composed of nickel sulfides. These generally stem from ore bodies at Norilsk in Russia and Sudbury in Canada. Applications for that product include battery production for electric vehicles, making them a fairly high-demand material in the current marketplace. Of course, nickel’s main application is in the production of austenitic stainless steel.

In his address, Martin noted that the London Metal Exchange introduced a several-point action plan back in March to prevent a repeat of the March 8, 2022 incident with its nickel contract.

London Metal Exchange and the Historic Nickel Squeeze

Traders will remember how prices for the metal soared to a high of $100,000 per metric ton over just two days. The spike was partly due to fears over the availability of nickel due to Russia’s invasion of Ukraine, which began in February 2022. However, the resulting prospects of sanctions against Norilsk Nickel only exacerbated matters. At the same time, Chinese nickel and stainless steel producer Tsingshan Holding Group was buying large volumes of product to reduce its exposure to the short position it had undertaken from 2021 as well as to margin calls.

The London Metal Exchange subsequently voided all trades from midnight to 8.15 that day. It also suspended trading for an additional eight days, prompting many market watchers and players to question the LME’s relevancy for the contract. The London Metal Exchange also noted that most of the traded nickel was Class II. 

Current Nickel Prices on the LME

The London Metal Exchange’s new action plan also introduced guidelines for listing new Class I nickel brands, garnering strong interest from new applicants. The bourse also evaluated the prospect of introducing new deliverable shapes aside from briquettes and cathodes. They claim they are also ready to launch nickel matte and nickel sulfate on their sister exchange, Qianhai Mercantile Exchange (QME). However, they clarified that this would be subject to market appetite. 

The LME’s three-month closing nickel price was $18,274 per metric ton on October 23. This represents a 4.24% decrease from the  $19,563 seen on September 25. There are also a number of signs that the demand side continues to slow. For example, in August, the electric vehicle sector experienced a downturn that saw battery prices decline 10% as manufacturers curtailed their buying activity. Meanwhile, data from metals trader Westmetall indicates that nickel stocks in LME-approved warehouses were 44,862 metric tons on October 23. This is up 8.64% from the 41,292 metric tons seen on September 25.

Steel News: CMC Poland Chooses Danieli Automation for Rolling Mill Revamp

Longs producer CMC Poland, a subsidiary of Texas-headquartered Commercial Metals Group, recently selected Danieli Automation to revamp a new rolling mill at its plant in Zawiercie. “The purpose of the revamping is to optimize rolling performances, as well as to update the mill hardware for increased plant availability,” Danieli said in an October 12 announcement.

The Italian company also said that part of the revamp would focus on CMC Poland’s reheating furnaces for cast billets to achieve the proper temperature for rolling. They added that “a new process control system for automatic set up of the heating curves of the furnace also will be supplied.”

The project is due for completion by year’s end, though Danieli did not indicate how much the work would cost. Danieli has its headquarters in northern Italy and is one the world’s largest equipment suppliers for the metals sector.

CMC Gives Polish Steel Production a Boost

CMC Poland is in southern Poland’s Silesian Voivodeship, often considered the country’s industrial center. Estimates indicate that the plant can produce approximately 500,000 metric tonnes per year of crude steel via two 140-metric tonne electric arc furnaces. It then casts this into billets for rolling into long products using two continuous casters.

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CMC Zawiercie’s finished product assortment includes rebar and wire rod as well as various merchant bar. Information from the company’s site indicates that these include round bar, flat bar, and square bar angles, as well as wire in coils and welded meshes for concrete. The primary end-users of the plant’s finished products include the construction, agriculture, and ship / machinery-building sectors.

CMC Poland mainly ships its products to neighboring countries like Slovakia, The Czech Republic, and Germany. The company also exports further afield to Hungary, Switzerland, the Benelux region, Italy, and the Balkans.

Reports indicate that rebar prices in Poland were about €590-600 ($625-635) per metric ton delivered in mid-October.

By Christopher Rivituso

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