LME’s CEO calls for more powers to intervene after nickel halt

By Zandi Shabalala and Pratima Desai

LONDON (Reuters) – The London Metal Exchange’s chief executive called for it to have more powers to intervene, after it was forced to halt nickel trading when prices spiralled out of control.

Nickel prices jumped to record highs above $100,000 a tonne on Tuesday as China’s Tsingshan Holding Group bought large amounts to reduce short bets on the metal, which is used to make stainless steel and electric vehicle batteries.

The LME was forced to suspend nickel trading for the first time since 1988 and is now trying to facilitate negotiations to net off long and short positions in order to reopen the market.

“This will be an important chapter in the LME’s history,” LME CEO Matt Chamberlain told Reuters on Wednesday.

The LME was also forced to intervene with temporary measures in October after copper prices surged due to strong demand and low stocks in LME-registered warehouses.

“This situation is and has been difficult. I hope that there will be greater willingness to talk about whether the LME should have more powers to intervene at an earlier stage,” Chamberlain, who is due to leave the LME at the end of April, said of nickel.

The LME’s shock move on nickel, which also includes giving members extensions to deadlines to meet delivery obligations, marks the biggest crisis in decades for the 145-year old market.

It has been walking a fine line between proponents of a more hands off LME, owned by Hong Kong Exchanges and Clearing (HKEx), and those seeking more rules to create stability.

The move to a more hands on approach could signal a battle between metal industry participants over how far it should go in controlling the market

Any changes would require buy-in from the LME’s members and would need to come through consultations to achieve a consensus.

“We have seen some systemic contagion in the nickel market,” Chamberlain said, adding there were no issues with the stability of the LME operation or that of its clearing house LME Clear.

“We are concerned the impact on the ecosystem, on members and clients could be significant,” Chamberlain said of the impact of the nickel trading suspension.

After five years at the helm, he will be succeeded by the current head of LME Clear Adrian Farnham on a temporary basis.

Chamberlain introduced many changes during his time at the LME including boosting the role of electronic trading to increase flagging volumes, which prompted a backlash from some of its members.

Asked why the LME did not let the market stay open, as the CME did in April 2020, when oil prices fell below zero, Chamberlain said margin calls “simply couldn’t be met by a number of our smaller members”.

“This was not in the interests of the LME,” he added.

(Reporting by Pratima Desai; editing by Alexander Smith)