LME Nickel

SETTING THE GLOBAL STANDARD

Nickel, which started trading on the London Metal Exchange (LME) in 1979, is a key
component in the making of stainless steel – 78% of the world’s nickel is consumed
by the stainless steel industry. It also plays a crucial role in battery technology and
will play a big part in the developing electric vehicle (EV) and energy storage stories.
In 2017, nearly 22m lots of LME Nickel were traded on exchange, equating to
approximately 132m tonnes and $1.4 trillion in notional value with a market open
interest high of over 345,000 lots (2.07m tonnes).
Nickel was first identified in 1751 by Swedish chemist Main industry
4%
5% uses of nickel
Axel Fredrik Cronstedt but can be traced in bronzes from
the Middle East as far back as 3500 BC. Miners in the 15th 10% 5%
century called it ‘Kupfernickel’ (devil’s copper) due to the
4%
Stainless steel
reddish hue of the ore and the difficulty it took to extract. 10%
3% Electric
Nickel is a silvery-white, high-shine metal originally used in Stainless steel
vehicle batteries
coins and now predominantly used to make stainless steel. 3% Electric
It is one of only three elements which are ferromagnetic Alloys
vehicle batteries
at, or close to, room temperature (the others are iron and 78%
cobalt). Often nickel is alloyed and used for plating because Plating
Alloys
of both its corrosion-resistant nature and the stress it can 78% Other
endure under high and low temperatures. Plating
Source: ING Research

Nickel use has been growing at a rate of about 4% a year Other

since 2010 while use of nickel-containing stainless steel
has been growing at roughly 6% according to the Nickel
Institute. The metals market as a whole has recognised that 4.6% 0.1%
green energy will play a key role in nickel’s future. The rapid
rise of electric vehicles and growing importance of battery
15.8% 8.5%
technology are likely to increase demand for higher purity
20%
nickel. Whilst EV’s only represent a small share of current 22.8%
automotive manufacturing, and in turn a small 4.6%part of the Nickel0.1%
mine Primary
nickel story, government policy and the strategic plans of production Nickel Usage
13.6% 2017 2017
well-known automotive players are driving
20% the renewable 15.8% 8.5%
energy industry forward, which will impact the nickel Africa
futures market.
22.8%
Nickel mine Primary
39% America
75.4%
production Nickel Usage
13.6% 2017 2017 Asia
4.6% 0.1% Europe

39% 8.5% Oceania

20% 15.8%75.4%
Source: Africa
International Nickel
22.8% Study Group (INSG)

Nickel mine Primary America

production Nickel Usage
13.6% 2017 2017 Asia
Europe

39% Oceania
75.4%
Trading LME Nickel
All of our non-ferrous metals contracts have close ties with the telephone trades are matched and cleared through our
physical market. The prices discovered on the LME are used matching platform, LMEsmart, and clearing house, LME Clear.
the world over in physical contracts, and because they can be
Electronic – LMEselect is our electronic trading platform,
physically settled (using the LME warehouse network), LME
which integrates with member trading platforms via a FIX
prices are truly reflective of global supply and demand.
API, either from member sites or via data centres to facilitate
The interaction on the LME between the physical and financial the lowest latency trading strategies. LMEselect is open for
communities provides highly liquid and deep order books with trading between 01:00 and 19:00 (London time). LMEselect is
tight spreads. only available to LME members but clients of LME members
can access it via member systems or member-sponsored
The LME’s unique prompt date structure means nickel can be
Independent Software Vendor (ISV) platforms (see below for
traded daily out to three months, weekly out to six months and
more details).
monthly out to 63 months.
Open outcry – The Ring, our open-outcry trading floor, is
LME Nickel facts central to the process of price discovery. LME Nickel is traded
• Lot size: six metric tonnes in four, highly liquid five-minute Ring sessions, which are
• Tick value: $30 (per lot) themselves representative of global supply and demand. Nickel
• Cost per tick ratio: $0.09 is traded on the Ring at these times: 12:15-12:20, 13:00-13:05,
• Contract types: futures, options, TAPOs, monthly average 15:25-15:30, 16:05-16:10 and ceases trading at 17:00 (London
futures, LMEminis and HKEX London minis traded on HKEX time).
derivatives platform.
Prices – The LME Official Price for nickel, discovered on the Ring
between 13:00-13:05, is used as the global reference. Contracts
Useful reports for material in a pre-semi-fabricated state will be priced at a
“discount” to the LME price and material further along the
LME Nickel trading volumes, prices and stocks data can be
value chain, like nickel sulfate, at a “premium”. The LME Nickel
found at: lme.com/reports
Closing Price, discovered at 17:00, is used for margining and
Get real time and historical LME trading data using our browser- valuation purposes.
based service LMElive: lme.com/lmelive or from any of our
licensed distributors by visiting: lme.com/licenseddistributor ISVs
Members and their clients may choose to access LMEselect via
Get nickel-specific data: lme.com/nickel member-sponsored ISV platforms. Client traffic passes through
an ISV pre-trade risk engine endorsed and fully controlled by
LME trading venues and prices
the sponsoring member’s compliance team. The following
Telephone – The Exchange supports an inter-office market
ISVs have passed LME conformance tests for order routing
between LME members which operates 24 hours a day. All
applications connecting via the LMEselect API for LME Nickel:
Trading Systems LLC

Greeksoft Technologies
FlexTrade UK Limited
Trading Technologies

SharpPoint System

EPAM Systems, Inc

Software Technology
Trading Screen Inc
FFastFill Europe

Redline Trading
International Inc
Patsystems UK

ObjectTraining
Stellar Trading

Shanghai Feishu
FIS (SunGard)
RTS Realtime

Cunningham
Technology
ATPlatform

Ion Trading

Fidessa plc

CQGT LLC
Solutions
OnixS.biz

Omnesys
Systems

Systems

E-Sunny

PVT. LTD
Limited

Limited

Co. Ltd

Ullink
KCG

Contracts

3M

3rd Weds

3rd Weds -
3rd Weds

LME
options
 10,000

100
8,000

Volatility % (RHS)
80

US dollars ($)
6,000

60

4,000
40

2,000
20
LME Nickel trading data
Average daily volume 0
120,000
Futures Options TAPOs Options and TAPOs %ages (RHS) 0
7%
Daily volume for LME Nickel averages

05

06

07

08

09

10

11

12

13

14

15

16

17

18

19
over 75,000 lots per day, with LMEselect

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
100,000 6%
volumes accounting for about 40% of all
80,000 5%
market traded volume. ADV (Lots)
4%
60,000
3%
40,000 Copper
2%
20,000
1%
0
0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

LME Copper 3W price LME Copper 3W ADV (RHS)

18,000
Nickel 8,000
16,000
7,000
14,000
6,000
3-Month price and intraday volatility 12,000
12,000 Nickel 3M price Volatility 10 Day % (RHS) 160

US dollars ($)
5,000
The 3-month (3M) price represents the 10,000
Lots

4,000
price agreed to settle or deliver material 8,000 140
10,000 3,000
three months from the time that the price 6,000
is agreed and concentrates liquidity on 4,000 2,000
120
one day. 2,000 1,000
8,000
0 0100
Volatility is an important parameter

Volatility % (RHS)
JAN MAY SEP JAN MAY SEP JAN MAY SEP JAN MAY SEP
US dollars ($)

for some participants as it can often 2015 2016 2017 2018

6,000 80
determine the level of involvement in
a financial instrument.
60
4,000

40
Copper
2,000
20

0 0
05

06

07

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09

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20

20

20

20

3rd Wednesday price LME Nickel 3W price LME Nickel 3W ADV (RHS)
10,000 18,000
3rd Wednesday contracts are monthly 9,000
futures that exist within the current 16,000
8,000 Nickel
prompt date structure for all major 14,000
7,000
12,000
LME contracts expiring on the 3rd
US dollars ($)

6,000
10,000
Wednesday of each month. 5,000
Lots

4,000 8,000
3,000 6,000
2,000 4,000
1,000 2,000
0 0
JAN MAY SEP JAN MAY SEP JAN MAY SEP JAN MAY SEP
2015 2016 2017 2018
 20

20

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20

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20

20

20

20

20

20

20

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20
1/

1/

1/
40

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/
2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/
Month 2 – Month 3, US dollars ($)
20

0
Copper

-20

-40

-60

-80
500
8,000 LME 3M SHFE (EX VAT 17%) MCX CME

07

08

09

10

11

12

13

14

15

16

17
3M to 3rd Wednesday spread

20

20

20

20

20

20

20

20

20

20

20
0

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/

1/
3, US dollars ($)
7,000

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/

2/
This is the spread between the 3M rolling
forward contract and a monthly futures -500
6,000
contract or an adjustment of a position
5,000
from the daily expiry (three months Month($) -1,000
forward) into monthly expiry.
2 –dollars
4,000
-1,500
Copper
3,000
US
Month

-2,000
2,000

1,000
-2,500

0
15

16

17

07

08

09

10

11

12

13

14

15

16

17
J J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J
20

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9 2016 2017 2018 2019
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2/
Calendar spread 200
3rd Wednesday to 3rd Wednesday
are calendar spreads (known as carries Nickel 0
Month 2 – Month 3, US dollars ($)

on the LME) used for rolling a position

-200
from one month to another.
-400

-600

-800

-1,000
Copper

-1,2000
7

7
00

00

00

01

01

01

01

01

01

01

01
/2

/2

/2

/2

/2

/2

/2

/2

/2

/2

/2
1

1
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Nickel

LME Nickel arbitrages 18,000 LME 3M SHFE (EX VAT 17%)

Regional prices for nickel can vary with 16,000
different factors like economic, physical
14,000
and logistical influences all playing a role.
12,000
Traders can arbitrage these temporary
US dollars ($)

differences and often do so by buying 10,000

LME Nickel and selling Shanghai Futures 8,000
Exchange (SHFE) nickel, or vice versa. 6,000

4,000

2,000

0
J J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J
9 2016 2017 2018 2019
Nickel production process
Nickel is found in two very different types of ore: sulfide ores and laterite ores. The type of ore in a specific deposit has
implications on how the deposit will be mined, how the ore itself will be processed into refined nickel and which uses it may
be best suited for.
Sulfide ores
Sulfide ores are crushed
and ground to separate
nickel minerals from the
waste materials by selective
flotation. Some nickel
sulfides are magnetic and
so magnetic separators can
be used instead of, or along
with, flotation
The solution is then electro
and/or carbonyl refined to
produce refined nickel
Nickel concentrates can
then either be leached with
sulfuric acid or ammonia,
or be dried and smelted in
flash and bath processes
The matte is then treated
by either roasting or using
an ammonia pressure leach,
whereby nickel is recovered
from a solution using
hydrogen reduction
The solution is then smelted
at 1,350°C (2,460°F) to
produce matte, which is a
nickel-iron sulphide,
usually containing
25-45% nickel
Iron matte is converted to
an oxide using a rotating
converter. This forms a slag,
which is then drawn off,
leaving a matte of
70-75% nickel
Laterite ores
Because they lack smelting process
sulphur, laterite nickel
ores do not have
the same pollution
problems as sulfide
ores. However, a large
amount of energy is
needed during the
Crude ferronickel is The solution is then
further refined by reduced using an
removing impurities electric furnace and
such as silicon, carbon heated between 1,360°
and phosphorus and and 1,610°C (2,480° to
is mostly used as a 2,93°F) to produce a
raw material for the crude ferronickel
stainless steel industry
 LME Nickel contract specification
Contract specification LME Nickel

Contract name and code LME Nickel (NI)

Contract type Futures

Delivery type Physically settled

Lot size 6 metric tonnes

Daily: out to 3 months

Contract period Weekly: 3 out to 6 months
Monthly: 7 out to 63 months

Price quotation US dollars per metric tonne

Clearable currencies US dollars, Japanese yen, sterling, euro

Venue Outright Carries

Minimum price fluctuation (tick size) Ring $5.00 $0.01
per metric tonne LMEselect $5.00 $0.01
Inter-office $0.01 $0.01

Termination of trading Up until the close of the first Ring the day before the prompt date

Trading venues Ring, LMEselect and inter-office telephone

Ring: 11:40 - 17:00 London time

Trading hours LMEselect: 01:00 - 19:00 London time
Inter-office: 24 hours a day

Margining Contingent variation margin

For more information about LME Nickel please visit our website at lme.com/nickel
or get in touch with the team: sales@lme.com

© The London Metal Exchange (the “LME”), 2018. The London Metal Exchange logo is a registered trademark of The London Metal Exchange.
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