Shanghai exchange to work on nickel futures internationalization

The Shanghai Futures Exchange (ShFE) will explore a nickel futures internationalization plan, an exchange official told an industry gathering, a step towards challenging the London Metal Exchange’s contract for the key energy transition mineral.

The Shanghai exchange will look to take advantage of restructuring in the global nickel pricing system, Zhang Ming, deputy general manager of ShFE, told the March 29 meeting hosted by the state-run China Nonferrous Metals Industry Association (CNIA), the group said on its media site on Tuesday.

Reuters reported in September that ShFE was looking into the possible launch of nickel futures for international use. One of the sources told Reuters at the time that ShFE had been studying the structure of the nickel market and supply and demand at the instigation of industry participants looking for alternatives.

London Metal Exchange (LME) prices are a global benchmark for the nickel industry.

But market confidence was shaken by a trading debacle in March 2022 that rocketed nickel to a record above $100,000 a metric ton, leading many users to abandon the LME.

Nickel is used to manufacture stainless steel and electric vehicle batteries.

The Shanghai exchange will also work on listing of green products – aluminum and recycled lead, mineral resources that China is rich in, including magnesium and tungsten, and battery materials, Zhang said, according to the report.

For the listed products, it will broaden their internationalization system, while promoting the establishment of overseas delivery warehouses, Zhang said.

Reuters reported last year that ShFE was looking to expand its commodities warehousing network outside China, and was examining systems and regulations in the sector overseas.

(By Siyi Liu and Andrew Hayley; Editing by Tom Hogue, Subhranshu Sahu and Susan Fenton)

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