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New nickel ‘irregularities’ blight trade

The troubled trade in nickel through the London Metal Exchange has suffered a further setback with reports that some consignments delivered from an LME approved warehouse contained nothing but stone.

In a statement, LME said: ‘The Exchange has received information that a number of physical nickel shipments, out of one specific facility of an LME-licensed warehouse operator, have been subject to such irregularities’.

The irregularities relate to bagged nickel briquettes and nine warrants (conferring ownership of metals stored in LME warehouses) were found not to conform to contract specifications.

The suggestion that the bags in question contained stones and were at a warehouse owned by Access World in Rotterdam came from Bloomberg. Access World told the agency ‘we are unable to comment on this due to pending investigations’.

LME has pointed out that live nickel stocks currently comprise 6 337 warrants so the ‘irregularities’ in this incident represent 0.14% of live nickel stock.

‘These nine warrants have been invalidated, and so cannot be delivered against LME contracts, and the warrant owner notified. In this context, the LME reminds licensed warehouse operators of the strict requirement to weigh all metal before it is placed on warrant.’

As a result of the situation, LME temporarily postponed nickel trading during Asian hours. ‘To the extent that this could impact trading behaviour when the market opens on Monday, the LME would prefer this to happen during London hours, when liquidity is generally stronger.’

‘Accordingly, the LME will postpone the return to Asian hours nickel trading from Monday 20 March 2023 until Monday 27 March 2023.’

Bloomberg added that Glencore recently sold Access World to Global Capital Markets, a company incorporated in the British Virgin Islands. It said the warrants cancelled by the LME were issued by Access World when it was owned by Glencore.

The development comes a month after Trafigura said it was the victim of ‘a systematic fraud’ by which more than 1 000 containers were allegedly wrongly bought as nickel consignments. A year ago, trading in nickel on the LME was suspended when prices shot up overnight.

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