The London Metal Exchange (LME) has made history by approving the listing of the first Indonesian brand to be delivered against the exchange’s primary nickel contract, marking a significant milestone for the world’s largest miner.
Indonesia has emerged as a new powerhouse in global nickel production, but has not previously produced significant amounts of the metal in the high-purity form traded on the LME. This approval of the DX-zwdx brand, produced by PT CNGR Ding Xing New Energy with an annual capacity of 50,000 metric tons, will enhance Indonesia’s selling power in the nickel market.
The LME’s decision to add the Indonesian brand is part of its efforts to revive nickel trade volumes following the crisis in 2022, when prices more than doubled in a disorderly market, leading to a suspension of trading for over a week. With new brands being added, the liquidity of nickel stockpiles in LME-registered warehouses is expected to increase.
The approval of the Indonesian brand also signals growing competition among producers of LME-deliverable nickel, as other local firms in Indonesia begin converting low-grade ore into LME-standard Class 1 metal. Despite a surplus created by rising output of nickel products in Indonesia, benchmark prices for nickel have fallen by 45% in 2023. However, the contract has seen a 22% increase this year as Indonesia reviews mining quota approvals and some producers adjust their output levels.
The listing of the Indonesian brand on the LME is a positive development for the global nickel market, and it will be interesting to see how this new player impacts the industry in the coming months.
