SHFE Indonesian Nickel Cathode Brands Strengthen Indonesia’s Class I Nickel Role

The Shanghai Futures Exchange

SHFE Indonesian nickel cathode brands have gained a major credibility boost after the Shanghai Futures Exchange approved two Indonesian-produced nickel cathode brands for delivery against SHFE contracts. The approvals cover PTENICO from Eternal Nickel Industry and DX zwdx from CNGR Dingxing New Energy.

The approvals mark an important step in Indonesia’s move from nickel ore and intermediate products toward exchange-deliverable Class I nickel. Indonesia has already become the world’s dominant nickel processing hub, but exchange approval gives its refined metal greater financial-market recognition.

SHFE Indonesian nickel cathode brands also reinforce the role of Chinese-backed industrial parks in building Indonesia’s downstream nickel value chain. Both approved producers are linked to major Chinese groups with strong positions in stainless steel or battery materials.

The development matters because exchange-deliverable nickel sits at the intersection of physical supply, futures market liquidity and industrial procurement. Approval by SHFE gives the brands wider acceptance among Chinese market participants and strengthens Indonesia’s role in Class I nickel trade.

Tsingshan and CNGR Extend Indonesia’s Refined Nickel Platform

Eternal Nickel Industry’s PTENICO brand was approved by SHFE after previously being listed on the London Metal Exchange on 16 December 2025. The company is a subsidiary of Chinese stainless steel producer Tsingshan Holding Group.

The plant is located in the Weda Bay Industrial Park in Halmahera, North Maluku. It uses an electrolytic process and has 50,000 t/yr of nickel cathode capacity, with nickel content of 99.96%.

Tsingshan’s involvement is strategically important. The group transformed global nickel markets through Indonesian nickel pig iron and stainless steel expansion, and it is now extending that influence into refined Class I nickel.

CNGR Dingxing New Energy’s DX zwdx brand was also approved by SHFE. The plant is located at the Indonesia Morowali Industrial Park and also uses an electrolytic process. It has 50,000 t/yr of nickel cathode capacity, with nickel content of 99.96%.

CNGR Dingxing is a subsidiary of CNGR, a major Chinese lithium-ion battery cathode active material precursor producer. This gives the brand a direct connection to battery materials supply chains, not only stainless steel demand.

The LME accepted CNGR Dingxing’s Indonesian nickel cathode brand in May 2024. It also approved cobalt cathode produced by CNGR in Qinzhou, Guangxi, in March, showing the company’s expanding exchange-approved metals footprint.

Together, PTENICO and DX zwdx represent 100,000 t/yr of Indonesian nickel cathode capacity. Their SHFE approval gives Indonesia a stronger position in futures-linked refined nickel supply.

Exchange Approval Changes Nickel Market Positioning

The two brands are the first Indonesian-produced nickel cathodes approved by SHFE for delivery. That is significant because Indonesia’s nickel rise was initially built around ore, nickel pig iron, ferronickel, matte and mixed hydroxide precipitate.

Exchange-deliverable cathode is a different market category. It requires tighter quality control, brand recognition and acceptance by financial and physical market users.

SHFE has approved Chinese-produced nickel cathode brands totalling 121,000 t since 2024. Adding Indonesian brands expands the pool of deliverable material and shows how Indonesia is being integrated into China’s nickel pricing and delivery system.

This could gradually influence nickel market structure. More deliverable Indonesian metal may improve flexibility for Chinese buyers, increase acceptable supply for futures settlement and strengthen the link between Indonesian production and Chinese exchange pricing.

The approvals also come during a period of Class I nickel oversupply. LME and SHFE inventories have risen as new refined nickel capacity has entered the market faster than demand growth from batteries and alloys.

Against that backdrop, brand approval can become a competitive advantage. Producers with exchange-deliverable status may have better access to financing, trade channels and customers that require recognised specifications.

For Indonesia, the approval supports a broader industrial policy objective. The country wants to capture more value from its nickel resources by moving beyond raw ore and intermediate exports into higher-value metal and battery materials.

For China, the approvals deepen supply-chain integration with Indonesian assets. Chinese companies are not only investing in Indonesian mines and smelters; they are building exchange-recognised refined metal capacity that can serve Chinese industrial and financial markets.

The Metalnomist Commentary

SHFE approval of Indonesian nickel cathode brands confirms that Indonesia is moving deeper into Class I nickel, not only bulk stainless and battery intermediates. The strategic issue now is whether this new exchange-deliverable capacity strengthens market liquidity or adds further pressure to an already oversupplied refined nickel market.

LME Copper Cathode Supply Could Rise as Chinese Smelters Push EQ Listings

Chinese Copper

LME copper cathode supply could increase as more Chinese smelters seek to register equivalent quality cathodes on the London Metal Exchange. The move reflects a push to capture higher premiums for material that is close to LME-registered brands in quality.

The near-term impact on LME copper cathode supply is likely to be limited. However, more registrations could gradually widen deliverable copper availability and give buyers more alternatives to traditional registered cathode brands.

Chinese smelters are targeting the premium gap between EQ cathode and fully registered material. African-origin registered copper usually earns a higher premium than EQ cathode, but it still trades below Chilean registered brands because many African cathodes are solvent-extraction and electrowinning products with slightly higher impurity levels.

DRC Cathode Listings Expand China-Linked LME Supply

The London Metal Exchange recently approved China Nonferrous Mining’s SMD copper cathode brand for listing. The brand is produced at the Deziwa project in the Democratic Republic of Congo, which has copper cathode capacity of 80,000 t/yr.

The Deziwa project is jointly owned by CNMC and the DRC’s state-owned mining company. It hosts 4.6mn t of copper metal resources and 420,000t of cobalt metal resources, giving it strategic value across both copper and battery metal supply chains.

CNMC’s production profile also shows a shift toward more refined copper output. The group produced 130,232t of copper cathode in 2025, up 3% from a year earlier, while copper blister output fell by 33% to 192,266t.

The LME has also approved CMOC’s TFM 1 copper cathode brand for listing. That brand is produced at Tenke Fungurume in the DRC, reinforcing the country’s growing role in exchange-deliverable copper supply.

Premium Strategy Could Reshape Refined Copper Trade Flows

LME copper cathode supply strategy is becoming more important as Chinese-linked producers look to improve market access and price realisation. Listing cathode brands can improve buyer acceptance, increase liquidity and narrow discounts against established registered brands.

The DRC is already China’s largest source of copper cathode imports. China imported 1.44mn t of copper cathode from the DRC in 2025, equal to 37.6% of total imports.

More LME-approved DRC brands could change how buyers view African cathode. If quality, documentation and deliverability improve, some buyers may become less dependent on higher-premium registered material from other origins.

Still, the immediate effect should remain modest. LME registration does not automatically mean large volumes will flow onto warrant, but it does increase optionality for producers, traders and consumers in a market where brand status affects pricing power.

The Metalnomist Commentary

The Chinese EQ cathode push shows that copper competition is moving into brand approval, deliverability and premium capture. The bigger implication is that DRC copper is becoming not only a Chinese import source, but a growing part of the LME-recognised refined copper system.

LME Approves Hong Kong as a Warehouse Location, Strengthening China’s Metal Supply Chain

LME Hong Kong

A Strategic Move to Expand Market Access

The London Metal Exchange (LME) has officially approved Hong Kong as a warehouse location, providing a new entry point into China, the world’s largest metals consumer. This development allows LME-registered metals, including aluminium, copper, lead, nickel, tin, zinc, and aluminium alloy, to be stored in Hong Kong. As a result, the city is set to become a critical hub for LME-warranted metal storage once warehouse companies receive approval in the next three months.

Enhancing Connectivity to the Chinese Market

LME Chief Executive Matthew Chamberlain highlighted the importance of this expansion, stating that Hong Kong’s proximity to China makes it a natural hub for metals trade and logistics. The move strengthens the LME’s global warehousing network, which currently includes 465 approved warehouses in 32 locations worldwide. The exchange considers various factors, including regulatory frameworks, fiscal conditions, and transport infrastructure, when approving new locations.

Despite this progress, efforts to establish LME warehouses in mainland China have faced regulatory challenges. Both China’s regulators and the Shanghai Futures Exchange (SHFE), a key competitor to the LME, have resisted these moves. Nevertheless, the approval of Hong Kong presents an alternative solution, allowing international metal traders better access to the Chinese market.

Strong Market Interest in Hong Kong as a Metal Hub

The LME has received strong interest from warehouse operators, landlords, and metal owners regarding Hong Kong’s listing as a metals delivery point. This approval is expected to increase liquidity and provide a more efficient supply chain for global metals traders. As the first warehouse companies gain approval, Hong Kong is likely to play a pivotal role in global base metal storage and distribution.

By positioning Hong Kong as an LME metal storage location, the exchange strengthens its presence in Asia, bridging the gap between international metal markets and China’s growing demand. This move not only benefits global traders but also reinforces Hong Kong’s status as a key financial and logistics hub in the metals industry.

NPI–Class I Nickel Spread Narrows as Metal Oversupply Pressures Prices

Nickel cathode

NPI–class I nickel spread narrowed sharply in March as persistent oversupply in the class I nickel market pushed metal prices lower, while nickel pig iron prices stayed supported by elevated production costs. The average spread fell to $2,975/t in March, down from the 2025 annual average of $3,696/t.

The narrower NPI–class I nickel spread shows how differently the two nickel markets are behaving. Class I nickel remains under pressure from high exchange stocks and weak absorption from battery and alloy users. NPI, by contrast, is being held up by Indonesian ore costs and a firmer production cost floor.

The current spread also discourages additional class I output from NPI conversion. Estimated conversion costs from NPI to class I nickel remain around $4,000/t, meaning producers using NPI as feedstock would face negative margins at current price levels.

This creates an important signal for the nickel supply chain. Oversupply is still weighing on refined metal, but high feedstock and processing costs are preventing prices from falling evenly across all nickel products.

Class I Nickel Oversupply Keeps Metal Prices Under Pressure

Class I nickel oversupply remains the main reason behind the compressed spread. London Metal Exchange nickel stocks reached 289,506t on 26 February, the highest level since May 2018.

Ample exchange inventory has pressured class I nickel prices and opened an import arbitrage window into China. China’s nickel imports rose by 18% in January-February as lower overseas prices made imported metal more attractive.

However, end-user demand has not been strong enough to absorb the surplus. Battery and alloy-sector consumption remained insufficient to clear the additional metal units, pushing Shanghai Futures Exchange nickel stocks higher.

SHFE nickel inventories rose to 65,764t on 10 April from 45,544t on 9 January. This inventory build shows that imports and domestic availability are running ahead of immediate consumption.

The oversupply problem is structural in the near term. New class I capacity has continued to emerge, while demand from stainless steel, batteries and specialty alloys has not grown fast enough to rebalance the market.

The NPI conversion route is therefore unattractive. When the NPI–class I nickel spread sits below conversion cost, producers have little incentive to turn NPI into refined metal. This helps prevent additional supply from that route, but it does not immediately remove existing class I oversupply.

NPI prices have been more resilient because they are tied closely to Indonesian ore economics. Indonesian nickel ore prices remain elevated and continue to trade above the government-mandated price floor.

Concerns over tight ore availability have supported feedstock values. This has limited NPI producers’ willingness to cut prices, even though stainless steel demand remains only average.

That cost floor is important. NPI is not rising because downstream demand is exceptionally strong. It is holding because ore, mining quotas and Indonesian pricing policy are preventing a deeper fall.

The result is a distorted market structure. Class I nickel is being pulled down by inventory pressure, while NPI is being supported by feedstock costs. This explains why the spread has narrowed despite weak overall nickel sentiment.

MHP and HPAL Costs Could Rebuild the Spread Over Time

Mixed hydroxide precipitate is becoming the more important cost driver for future class I nickel production. Much of the newly added class I capacity relies on MHP feedstock rather than NPI.

Integrated producers with their own Indonesian MHP capacity have a cost advantage. Their MHP production costs are estimated at around $13,000/t in nickel metal equivalent, with conversion costs from MHP to metal at roughly $3,000/t.

This places the total cost of class I production through the MHP route at about $16,000/t. That cost base can still support production for integrated operators, but it leaves less room for producers relying on third-party MHP.

The market problem is that MHP supply is not sufficient to meet all feedstock requirements for new class I capacity. This creates competition for MHP units and limits how much low-cost refined nickel can be produced through this route.

Cost pressure is also rising across HPAL operations. Middle East tensions have tightened sulphur availability and lifted sulphur prices, which directly affects MHP producers that rely on sulphuric acid-intensive processing.

Sulphur and sulphuric acid are central to HPAL economics. Any disruption to sulphur flows can raise operating costs, reduce margins or force producers to curtail output if acid availability becomes constrained.

Indonesia’s revised nickel ore pricing formula adds another layer of pressure. The new formula is expected to have a greater impact on ore consumed by HPAL projects than on ore used by rotary kiln electric furnace operations.

This is because HPAL ore often trades closer to official pricing levels, while RKEF ore used for NPI already trades at premiums well above the benchmark. As a result, HPAL producers may feel the revised HPM framework more directly.

Higher ore prices and higher taxes could lift MHP production costs. That would eventually raise the cost floor for class I nickel produced through the MHP route, especially for integrated producers that had previously enjoyed lower feedstock costs.

This cost inflation may support class I nickel prices over time. While current oversupply is weighing on metal values, producers cannot keep adding supply indefinitely if feedstock and conversion costs rise.

NPI prices are also likely to remain anchored by costs. Indonesian ore tightness, quota uncertainty and pricing reforms should continue to support NPI even if stainless steel demand stays moderate.

As MHP costs rise and NPI prices remain cost-supported, the NPI–class I nickel spread may widen back toward the $3,500-4,000/t range over time. That would restore a more normal relationship between feedstock products and refined metal.

However, the timing depends on inventory absorption. Class I nickel prices will struggle to recover strongly until exchange stocks stop rising and downstream demand improves.

For battery supply chains, the key issue is cost pass-through. If MHP and HPAL costs rise while class I prices remain weak, margins across nickel sulphate and cathode material chains could tighten.

For stainless steel producers, NPI resilience means raw material costs may remain sticky even without strong demand. This could limit margin recovery if finished stainless prices do not rise in parallel.

The nickel market is therefore entering a complex adjustment phase. Oversupply is pushing refined metal lower, while policy, ore availability, sulphur costs and HPAL economics are raising the cost floor beneath intermediate products.

The Metalnomist Commentary

The narrowing NPI–class I nickel spread is not a sign of healthy convergence. It reflects class I oversupply on one side and cost-protected NPI on the other. The next shift will likely come from rising HPAL and MHP costs, not from a sudden recovery in nickel demand.

LME Announces Reforms for Key Metal Contracts

The London Metal Exchange (LME) has announced a range of measures aimed at boosting electronic trading on its LMEselect platform while reducing ring trading activity in its three-month contracts for key industrial metals that serve as global benchmark references. The exchange said the measures, outlined in a white paper released today, aim to increase liquidity and enhance price transparency, while preserving its unique physical metal trading practices.

The LME's white paper mainly sets out a liquidity provider programme, the introduction of block trade rules, increased transparency for inter-office trades and over-the-counter (OTC) lookalike trades as part of its reforms. The block trade rules will require smaller trades involving each monthly date out to one year for metals such as aluminium, copper, zinc, nickel and lead to be executed electronically via LMEselect. But it said its daily prompt date structure, essential for physical market trading, will remain unaffected by this change.

To further support the block rules, the LME's new liquidity provider programme will incentivise the trading of "certain liquid instruments" at the front end of the curve, it said. And the LME added that it will require all trades, regardless of size, to be booked into the LME system and published on external market data feeds, a move designed to increase transparency by bringing even inter-office trades into the electronic fold.

The rules introduced for exchange-traded activity will also apply to OTC trades, the LME said. It will introduce similar block rules for OTC contracts that reference LME prices, creating a transparent central liquidity pool for all activity.

The exchange will work with members to assess the impact of proposed changes to their business models, with working groups established over the next 12 months to discuss the details of the implementation.

The proposed measures will undergo a formal consultation process and a regulatory approval process, with the LME aiming to implement the full package of reforms in the second half of 2025. Testing for the new trading system that incorporates the reforms has already started, the bourse said.

Open-outcry trading in the exchange's ring is used to set official prices used by both the physical and speculative markets, with LME select used for closing prices.

LME Harjavalta Nickel Suspension Puts Class 1 Nickel Warrants Under Review

Harjavalta Nickel

LME Harjavalta nickel suspension will stop new warranting of Norilsk Nickel Harjavalta’s primary nickel briquettes and cathodes from 19 June. The London Metal Exchange said no further deliveries of these Finnish-produced products will be accepted for warranting after that date.

The LME Harjavalta nickel suspension does not remove existing warranted metal from the system. Material already on warrant can continue to circulate, but once cancelled after the deadline, it will not be eligible for re-warranting.

The move matters because Harjavalta is a key European source of class 1 nickel. Its cathodes and briquettes are used in stainless steel, battery materials, alloy production, and other high-purity nickel applications.

Administrative Review Appears More Likely Than Supply Disruption

Market participants view the LME Harjavalta nickel suspension as likely procedural rather than a sign of quality or production problems. The three-month lead time suggests the issue may relate to documentation, compliance, or brand listing requirements.

The LME regularly reviews listed brands to ensure producers meet exchange rules. These rules include responsible sourcing standards and documentation obligations, which have become more important across metals markets.

That interpretation limits the immediate market impact. Traders do not expect a major disruption to European nickel availability or premiums, especially because other high-grade nickel brands remain available within the broader class 1 supply pool.

Class 1 Nickel Flexibility Reduces Near-Term Market Risk

Harjavalta material remains important, but the European market has some flexibility through substitution between high-grade forms such as cathodes, briquettes, and rounds. This flexibility should reduce the short-term impact of the warranting suspension.

The spot market may also see limited direct disruption because Harjavalta has reportedly committed most near-term capacity to term contracts. That means spot availability was already constrained before the LME announcement.

Still, the suspension highlights the rising importance of exchange compliance in critical metal supply chains. For nickel buyers, warrant eligibility, responsible sourcing documentation, and brand approval status are becoming part of supply risk management.

The Metalnomist Commentary

The LME Harjavalta nickel suspension is unlikely to trigger an immediate supply shock, but it shows how administrative compliance can affect market liquidity. In class 1 nickel, exchange status now matters almost as much as physical availability.

SHFE Bolsters Nickel Futures Market with New Brand Listings

The Shanghai Futures Exchange (SHFE)

The Shanghai Futures Exchange (SHFE) has recently enhanced its nickel futures market by approving the registration of two new nickel brands, HUAYOUgx and CNGR, on 20 December. This decision marks a significant step in increasing market liquidity and underscores the growing influence of Chinese brands in the global metal markets.

New Additions to the Nickel Futures Market

HUAYOUgx is produced by Huayou, one of China's leading battery metals and materials producers, at its subsidiary in Yulin, located in the Guangxi province. This brand boasts a registered annual capacity of 30,000 tonnes per year. Similarly, CNGR, produced by CNGR's subsidiary in Quinzhou, Guangxi, has a registered capacity of 25,000 tonnes per year. These additions are part of SHFE's broader strategy to enhance the dynamics of its nickel futures offerings.

In 2024, SHFE approved four new brands, adding a total of 121,000 tonnes per year of newly registered capacity. This initiative is aimed at improving the liquidity of nickel trading on the exchange, making it more attractive for investors and industry stakeholders.

International Recognition and Future Prospects

Both HUAYOUgx and CNGR have not only secured approval from SHFE but also received green lights from the London Metal Exchange (LME) through its fast-track system earlier this year. The fast-track system expedites the process of listing new metal brands, facilitating quicker entry into the market.

Additionally, the LME is currently reviewing an application from another Chinese nickel producer, Jien, submitted on 25 November. Approval of Jien's brand would further extend the roster of Chinese and Asian nickel brands on LME, potentially increasing the total registered capacity for new brands from these regions to 126,600 tonnes and 176,600 tonnes per year, respectively.

LME Minimum Volume Threshold Delay Gives Members More Time for Electronic Trading Shift

LME electronic platform

LME minimum volume threshold enforcement has been delayed until 24 August, giving members more time to adapt systems, workflows and automated trading processes. The London Metal Exchange said the extension followed requests from market participants for additional testing before enforcement begins.

The LME minimum volume threshold rule is part of a wider reform package designed to shift more trading activity onto the electronic LMEselect platform. The rule sets block trade thresholds at 15 lots for aluminium, 10 lots for copper, lead and zinc, and five lots for nickel.

The LME minimum volume threshold formally took effect on 30 March, but enforcement was initially suspended under a 12-week grace period. That non-enforcement window has now been extended by two months, delaying the first enforcement date to late August.

The delay does not change the direction of LME reform. It only gives members more time to prepare for a market structure that increasingly rewards electronic execution, price transparency and on-screen liquidity.

Electronic Trading Reform Moves Forward on a Slower Timeline

The LME’s reform package aims to increase activity on LMEselect while preserving the exchange’s daily-date structure and physical trading features. This balance is important because the LME serves both financial participants and physical metals users.

The minimum volume threshold is designed to push smaller trades toward electronic execution. Larger trades can still use block-style arrangements, but the thresholds create a clearer boundary between electronic order book activity and inter-office trading.

The exchange said members needed more time to modify and test automated systems. This is a practical issue, not just a regulatory one. Trading firms must ensure order routing, compliance monitoring, audit trails and execution systems can handle the new framework.

The revised timetable also delays the launch of the new automated crossing order type to 22 June. The tool has been available in the market test environment since 2 February, but the exchange wants to allow more build and testing.

The new schedule creates a two-month gap between the crossing tool launch and the end of the MVT grace period. The previous timeline offered only one month.

This matters because crossing functionality could help participants manage execution under the new regime. It gives members another tool before the LME starts enforcing minimum volume thresholds.

The Liquidity on Orderbook Programme has also been delayed. LOOP will now launch on 3 August instead of 22 June, shortly before the MVT grace period ends.

LOOP is intended to add liquidity on LMEselect before full enforcement begins. Its delayed launch means the market will have less time to observe how additional order-book incentives affect execution behaviour.

The expanded definition of short-dated carry will also take effect on 24 August. This change will allow more trades to qualify for lower transaction fees, aligning the carry fee change with the end of the grace period.

These timeline changes show that the LME is still committed to reform, but it is trying to avoid operational disruption. A rushed transition could weaken confidence among members, especially in markets where physical users rely on stable execution channels.

Fee Incentives and Audit Monitoring Reinforce the Order Book Strategy

The LME’s fee changes remain central to its market structure strategy. Client fees are now differentiated by venue, creating a financial incentive to use LMEselect.

Inter-office transaction fees have risen by about 20%. At the same time, client electronic trading and clearing fees have been reduced by 7.4-8.5%.

The exchange said these changes lowered the all-in transaction cost for a client outright trade on LMEselect by 4.5%. This makes electronic execution more attractive from a cost perspective.

The fee structure supports the same goal as the minimum volume threshold. The LME wants more price competition and liquidity to appear on the electronic order book.

This is strategically important for base metals markets. Aluminium, copper, zinc, lead and nickel all depend on transparent price discovery because LME prices influence physical contracts, hedging, inventories and financing.

More electronic liquidity could improve visible market depth. It could also reduce reliance on bilateral inter-office execution for trades that can be handled on-screen.

However, the transition also creates compliance and workflow challenges. Members must determine which trades fall below the thresholds, how to route them, and how to document exceptions.

The LME will continue monitoring sub-MVT inter-office trading during the grace period. It will also generate example audit requests for members.

Members will not be required to respond to these sample audit requests during the extended non-enforcement period. But the process gives firms a preview of the documentation and oversight expected after enforcement begins.

That approach is useful. It lets the exchange test market behaviour and helps members identify gaps before penalties or enforcement actions apply.

The latest delay also shows that the LME is managing competing priorities. It wants to modernise execution and improve transparency, but it must avoid disrupting the physical metals ecosystem that underpins its global benchmark role.

The reform package was first set out in September 2024 and refined through consultations and roadmap updates in 2025. The latest timeline adjustment suggests the LME is still responding to member feedback while maintaining its long-term direction.

For industrial users, the change may not immediately affect physical metal procurement. But it could gradually influence hedging costs, execution methods and liquidity conditions around benchmark pricing.

For brokers and trading firms, the impact is more direct. They must invest in systems, compliance procedures and client workflows that fit a more electronic market structure.

For the LME, the key test will be whether the reforms increase electronic liquidity without weakening the market’s daily-date flexibility. That daily-date structure remains one of the exchange’s defining features for physical metals users.

The Metalnomist Commentary

The LME delay is not a retreat from electronic reform; it is a controlled transition. The exchange is giving members more time, but the strategic direction remains clear: more order-book activity, stronger transparency and fewer small trades handled off-screen.

Copper Aluminium Pricing Divergence Deepens as Middle East Shock Turns Metal-Specific

Sucden Financial

Copper aluminium pricing divergence is becoming clearer as base metal markets absorb the first shock of the Middle East conflict. Copper is shifting back toward physical flows, inventories and policy risk, while aluminium remains supported by direct disruption to Middle East supply chains.

Copper aluminium pricing divergence reflects a broader change in market behaviour. Traders are moving away from headline-led volatility and focusing more on spreads, premiums, inventories and real supply constraints.

Copper aluminium pricing divergence also shows that the base metals complex is no longer trading as one geopolitical basket. Each metal is now being priced according to its own exposure to the war, its physical balance and its ability to replace disrupted supply.

UK broker Sucden Financial said the conflict initially drove broad volatility across commodities. But that phase is fading, leaving copper and aluminium on different pricing paths.

Copper Moves From Macro Risk to Physical and Policy Pricing

Copper began the year as a macro-driven metal. Prices moved with broader risk sentiment, oil, gold and cross-asset positioning.

That relationship is now weakening. Copper is increasingly being priced through its own market signals, including Shanghai inventory drawdowns, US flow incentives, mined supply quality and sulphuric acid-related supply-chain disruption.

This shift matters because copper is no longer responding only to global growth fears or geopolitical headlines. It is being priced through physical availability and policy exposure.

The Comex premium has periodically reopened the arbitrage for copper units to move into the US. This has made the interaction between LME, Comex, inventories and US policy more important to price discovery.

Sucden said the next phase of copper pricing could be shaped by material-security concerns. These include tariff threats, incentives to hold more metal in the US and the strategic value of copper in energy infrastructure.

This is a macro-to-micro rotation. Copper is moving away from broad geopolitical trading and toward a market driven by premiums, spreads, stock locations and supply-chain constraints.

Sulphuric acid remains a key hidden risk. Copper supply from leaching operations, particularly in regions such as the Democratic Republic of Congo and Chile, can be affected if acid availability tightens or costs rise.

The market still remains exposed to recession fears. A deeper economic slowdown caused by the conflict could weigh on copper demand and financial positioning.

However, copper’s resilience suggests that traders are giving greater weight to structural tightness. Supply challenges, low-quality mined material and long-term demand from grids, electrification and industrial policy continue to support the metal.

Sucden argued that copper’s long-term direction remains higher and that price dips should be bought. The structural case has not changed, while eventual dollar weakness after a conflict resolution could provide further support.

Aluminium Holds a Firmer Physical Floor After Supply Shock

Aluminium has already repriced much of the Middle East disruption. The metal briefly moved toward the upper end of its recent range as the conflict escalated, but repeated failures above $3,650/t suggest the market needs further supply deterioration to justify another major move higher.

This does not mean aluminium is weak. It means the initial panic premium has already been absorbed.

Aluminium’s support is more physical than copper’s. The disruption affects smelting, feedstock flows and export availability from the Middle East, making the supply shock more direct than headline numbers may suggest.

Sucden said aluminium remains the base metal with the clearest exposure to the Middle East war. Ex-China supply is tighter, London Metal Exchange inventories are falling and nearby spreads have moved into backwardation.

Chinese inventories have risen, but that does not fully offset the tightness outside China. Regional availability matters more when logistics, origin and delivery routes are disrupted.

Aluminium smelters also cannot restart quickly. Once production is curtailed, bringing capacity back requires time, stable power and commercial confidence.

Elevated energy prices add another layer of cost support. Even if the war de-escalates, smelters and downstream producers may still face a higher operating cost base.

Sucden said de-escalation could initially push aluminium prices toward $3,400/t. But any decline may prove short-lived if physical tightness remains.

This gives aluminium limited immediate upside but also limited downside. The market has already priced much of the shock, yet replacement supply is not easy to find.

The broader implication is that aluminium is trading a tighter physical balance, not only a war premium. That makes its price floor firmer than a market driven purely by sentiment.

For industrial buyers, the copper-aluminium split is important. Copper procurement risk is increasingly tied to policy, US flows and strategic inventory. Aluminium risk is tied more directly to missing tonnes, energy costs and disrupted regional supply.

The Metalnomist Commentary

The Middle East conflict is exposing the real structure of each base metal market. Copper is becoming a policy-and-premium metal, while aluminium is being supported by a more immediate physical supply shock.

Russian Aluminium Dominates LME Stocks Amid Decline in Indian-Origin Metal

Russian Aluminium Dominates LME Stocks Amid Decline in Indian-Origin Metal

The proportion of Russian aluminium stored in London Metal Exchange (LME) warehouses surged to 65% by the end of July, despite the overall quantity of Russian metal remaining largely stable. This shift in market share is primarily due to a significant reduction in the stock of Indian-origin aluminium, which depleted over the course of the month.

According to the latest report from the LME, Russian-origin aluminium on-warrant stocks totalled 233,775 tons at the end of July, marking a modest increase of 1,215 tons compared to the previous month. However, this relatively small increase led to Russian aluminium accounting for 65% of the total on-warrant LME stocks, a significant jump from 50% at the end of June. In contrast, the total on-warrant LME stocks fell to 359,250 tons, representing a 23% decline from the start of the month.

The LME distinguishes between two types of Russian aluminium warrants: Type-1, for metal stored before the LME's ban on Russian metals produced on or after April 13, and Type-2, which pertains to metal subject to trade restrictions imposed after that date. Type-1 Russian warrants decreased by 1.9% over the month to 225,450 tons, while Type-2 warrants increased from 2,775 tons to 8,325 tons.

Meanwhile, Indian-origin aluminium stocks in LME warehouses fell sharply, down by 37% to 119,575 tons by the end of July. This decline reduced the Indian share of total on-warrant LME stock to one-third, down from 41% at the end of June.

Earlier this year, Russian aluminium accounted for as much as 90% of LME stocks as Western consumers increasingly self-sanctioned against Russian metal in response to geopolitical tensions. This led to calls for a complete ban on Russian metal deliveries, which was eventually implemented by the LME in April, following new sanctions from the UK and US governments.

Elliott Management Loses Appeal in LME Nickel Trades Dispute

Elliott Management

US hedge fund Elliott Management's legal battle with the London Metal Exchange (LME) reached a conclusion today as the UK Court of Appeal upheld a prior ruling in favor of the LME. The court dismissed Elliott's appeal over the cancellation of billions of dollars' worth of nickel trades, which the LME executed following a market crisis in March 2022.

Court Upholds LME's Authority Amid Market Turmoil

The legal case stems from events on 8 March 2022, when nickel prices spiked to over $100,000 per ton due to a short squeeze, creating chaos in the market. In response, the LME intervened and cancelled $12 billion in trades to stabilize the situation. Elliott Management, which was among those affected by this decision, argued that the LME had acted improperly, favoring specific market participants who were on the verge of substantial losses. The hedge fund accused the LME of effectively providing bailout packages and contended that the exchange lacked the authority to annul these trades.

However, the Court of Appeal affirmed that the LME acted legally, ruling that its decision was made "in the interest of the market as a whole." The judgment stated that the LME's intervention was essential to prevent a potential "death spiral" that could have threatened the stability of the international metals market. Lord Justice Stephen Males, presiding over the case, noted, "To have allowed the 8 March trades to stand would have meant a real risk of what has been graphically described as a 'death spiral'... That left the LME with effectively no choice."

The ruling aligns with the London High Court's previous decision, which dismissed Elliott's initial lawsuit in November 2022. Trading group Jane Street also challenged the LME's actions but faced a similar outcome. Both firms had sought compensation for their losses, but the courts have consistently ruled in favor of the LME.

Reforms and the Path Forward

The LME welcomed the court's decision, which it believes validates the exchange's actions during the crisis. LME chairman John Williamson said, "The LME board is pleased with this positive outcome, which reinforces the Divisional Court's findings that the LME's actions were lawful, rational, and in accordance with its rules." Williamson also emphasized that the exchange is now focused on market modernization efforts, including reforms around price limits and enhancing visibility of over-the-counter trades, to restore trust and confidence.

Elliott Management, while expressing disappointment, has not ruled out further action and is currently evaluating its next steps.

Nickel Industries Indonesian Output Shows Ore Pressure Despite HPAL Growth

Nickel Industries, Indonesian

Nickel Industries Indonesian output was mixed in the first quarter as lower mining volumes and declining nickel grades contrasted with higher nickel pig iron and mixed hydroxide precipitate production. The Australia-based producer reported weaker ore output but stronger downstream processing across its Indonesian RKEF and HPAL assets.

Nickel Industries Indonesian output reflects the increasingly complex operating environment for nickel producers in Indonesia. Mining permits, ore grades, sulphur availability and downstream ramp-up timing are all shaping production performance.

Nickel Industries Indonesian output also shows why Indonesia’s nickel market can no longer be viewed only through capacity additions. Feedstock access and ore quality are becoming just as important as new processing plants.

Total nickel ore production fell by 30% from a year earlier to 3.96mn wet metric tonnes in January-March. However, output almost tripled from the previous quarter after mining activity recovered from RKAB quota delays late last year.

RKAB Quota Recovery Supports Ore Flow but Grades Weaken

Nickel Industries received 14.3mn wmt of 2026 RKAB nickel ore quota this year. This was 36% higher than its total approved quota of 10.5mn wmt in 2025.

The higher quota helped production recover from the December quarter, when mining was disrupted by RKAB delays. The company also plans to apply for additional RKAB quotas later this year.

The Hengjaya mine supplies ore to Nickel Industries’ RKEF and HPAL plants. These facilities produce nickel pig iron for stainless steel markets and mixed hydroxide precipitate for battery material supply chains.

Total NPI output from the Hengjaya, Ranger, Oracle and Angel RKEF operations rose by 4.4% year on year and 1.7% quarter on quarter to 274,086t.

However, nickel-contained production fell to 30,264t because the average nickel content of NPI dropped to 11% from 12.1% a year earlier. This is a critical signal for margins because lower grades reduce metal output even when furnace volumes rise.

The result shows how Indonesian nickel producers face a tightening relationship between ore availability and processing efficiency. Higher RKEF output does not automatically mean stronger nickel production if feedstock grades weaken.

HPAL Growth Continues as ENC Start-Up Moves to Second Quarter

Nickel Industries’ Huayue Nickel Cobalt HPAL project produced 21,526t of nickel and 2,370t of cobalt in MHP form during the first quarter. Nickel output rose by 1.7% from a year earlier, while cobalt output increased by 23%.

This growth strengthens Nickel Industries’ exposure to battery materials. MHP remains a key intermediate product for nickel sulphate and other battery chemical supply chains.

The company’s next major step is the Excelsior Nickel Cobalt HPAL project. Commissioning has been delayed to the second quarter, with full ramp-up targeted by the end of October.

ENC had previously been expected to start commissioning in the first quarter. The delay matters because HPAL projects are technically complex and depend on stable feedstock, acid supply, utilities and commissioning discipline.

Nickel Industries said it has enough sulphur inventory to support ENC’s ramp-up until the third quarter. The company previously bought sulphur at an average price of $450/t.

Sulphur availability is now a strategic issue for HPAL producers. Any disruption in sulphur or sulphuric acid supply can raise costs and slow production growth across Indonesia’s battery nickel chain.

The company also plans to list nickel cathode produced at ENC on both the London Metal Exchange and Shanghai Futures Exchange. Exchange approval would support market acceptance and improve the project’s commercial flexibility.

Nickel Industries increased its stake in ENC by 2% for $46mn on 1 April, lifting its interest to 46% and making it the project’s largest shareholder. This gives the company greater exposure to Indonesia’s move from NPI and MHP toward Class I nickel products.

The broader implication is clear. Nickel Industries is moving across the Indonesian nickel value chain, from ore mining and RKEF production into HPAL, MHP and exchange-deliverable cathode.

The Metalnomist Commentary

Nickel Industries’ quarter shows that Indonesia’s nickel growth is becoming more constrained by ore quality, RKAB permits and sulphur logistics. Capacity still matters, but the winners will be producers that control feedstock, manage HPAL complexity and secure recognised Class I nickel routes.

LME Fined £9.2M by UK Regulator Over 2022 Nickel Market Crisis

LME

FCA Cites Inadequate Controls and Staffing Failures During Historic Short Squeeze

FCA Penalizes LME for Mishandling Nickel Price Surge

The London Metal Exchange (LME) has been fined £9.2 million ($11.9 million) by the UK Financial Conduct Authority (FCA) following its investigation into the March 2022 nickel short squeeze. The FCA concluded that the exchange lacked sufficient systems and controls to manage extreme volatility during the weeklong price spike, when nickel prices surged past $100,000 per tonne.

Between March 4–8, 2022, the nickel market experienced unprecedented stress. The crisis was triggered by massive over-the-counter short positions held by Tsingshan, a leading Chinese nickel producer. In response, the LME suspended nickel trading for eight days and controversially canceled all trades executed on March 8.

Regulators Cite Lack of Price Bands and Untrained Staff

The FCA identified LME’s failure to use automatic volatility controls, such as price bands, as a major weakness. Furthermore, the exchange’s decision-making process was too reliant on senior staff who were unavailable during Asian trading hours, when the crisis escalated.

At the height of the squeeze, junior operations staff—lacking crisis training—disabled price bands instead of escalating the situation. This action allowed nickel prices to rise faster than they should have. The exchange’s failure to report abnormal activity to its Hong Kong office worsened the volatility.

LME Implements Reforms, Wins Litigation Battles

The LME accepted the FCA’s findings and qualified for a 30% fine reduction. Since the crisis, the exchange has introduced daily price limits across all metals and improved oversight of OTC positions. These reforms aim to prevent similar breakdowns in market order.

Legal fallout followed the LME’s decision to cancel trades, with Elliott Management and Jane Street suing for losses of $456 million and $15 million, respectively. However, the UK High Court ruled in LME’s favor, and the UK Supreme Court recently denied Elliott permission to appeal.

The FCA’s decision underscores the critical need for robust trading oversight, especially during periods of extreme market stress.

Amag Aluminium Earnings Fall as Tariffs and Weak Automotive Demand Pressure Margins

Amag Aluminium

Amag aluminium earnings fell in 2025 as weaker shipments, US trade tariffs, and soft European automotive demand weighed on performance. The Austrian downstream aluminium producer reported a 23.5pc decline in Ebitda to €137mn, despite a modest increase in revenue.

Revenues rose by 2.1pc to €1.48bn, supported by higher London Metal Exchange aluminium prices. However, total shipments fell by 1.7pc to 417,600t, while external shipments declined by 2pc to 382,000t. This shows that higher metal prices helped protect sales value but did not offset the pressure on operating earnings.

Amag aluminium earnings also faced headwinds from lower premiums, a stronger euro-dollar exchange rate, and tariff effects across the company’s divisions. The result highlights the difficult position of European downstream aluminium producers, which must manage weak regional demand, high costs, and uncertain trade conditions.

Automotive Weakness Hits Casting and Rolling Performance

Amag’s casting division improved productivity but continued to face weak demand from the European automotive industry. US trade tariffs also affected performance, adding another layer of pressure to already fragile customer demand.

The rolling division faced similar challenges in automotive applications. Sales weakened in the automotive sector, although industrial applications and packaging showed stronger demand. This mixed performance reflects a broader split in downstream aluminium markets, where packaging and industrial uses remain more resilient than vehicle-related consumption.

High energy and personnel costs at Amag’s Ranshofen site further compressed margins. This is a major structural issue for European aluminium processors, especially as competition from lower-cost regions remains intense and customers continue to push for cost control.

Higher Aluminium Prices Limit the Earnings Decline

Higher LME aluminium prices helped limit the fall in Amag aluminium earnings. Average LME aluminium prices were 7.4pc higher than in 2024, supporting revenue even as shipment volumes declined.

However, lower premiums reduced the benefit of stronger aluminium prices, particularly in the metal division. The division also faced weaker shipments and exchange-rate pressure, showing that price gains alone cannot fully protect margins when premiums, volumes, and currency conditions move against producers.

Amag declined to provide an earnings forecast for 2026 because market conditions remain challenging. Still, the company pointed to some positive signs from economic forecasts, sentiment, customs arrangements, and order intake. Overall aluminium demand is expected to rise, but rolled aluminium demand in Europe is likely to remain weak.

The Metalnomist Commentary

Amag’s results show that European downstream aluminium remains caught between price support and weak industrial demand. The key risk is that tariffs and high operating costs continue to erode competitiveness even if broader aluminium consumption improves.

Copper Supply Chain Fragility Is Underpriced Despite Price Rally

Ivanhoe

Copper supply chain risk is still being underpriced even after London Metal Exchange prices rallied above $13,000/t, according to Ivanhoe Mines chairman Robert Friedland. He warned that higher prices alone will not quickly unlock new mine investment or solve the operational bottlenecks now shaping copper supply.

The copper supply chain is facing a more complex problem than headline market balances suggest. Friedland pointed to sulphur, sulphuric acid, diesel and other critical inputs as increasingly important constraints for mining operations, especially in Africa.

The copper supply chain is particularly exposed in the Democratic Republic of Congo, where a large share of production depends on acid leaching. If sulphuric acid availability tightens further, Friedland said about half of the DRC’s low-grade leached copper could be at risk unless higher copper prices offset sharply higher acid costs.

This warning comes as the Middle East conflict affects copper markets indirectly. The immediate threat is not concentrate supply, but sulphur-linked cost inflation that can raise operating costs for solvent extraction and leaching operations.

Sulphuric Acid and Diesel Risks Expose Mining Cost Vulnerability

Sulphuric acid has become a central issue for copper supply because much of the DRC’s production relies on acid leaching. A prolonged disruption in sulphur flows could affect roughly 3mn t/yr of DRC copper output, making the country one of the most exposed parts of the global copper market.

The DRC’s vulnerability is different from that of traditional concentrate producers. Concentrate supply depends on mining, milling, logistics and smelter demand. Leached copper also depends on steady sulphur or sulphuric acid access, which creates another layer of supply-chain risk.

Ivanhoe’s Kamoa-Kakula complex is unusually positioned because it produces sulphuric acid as a by-product rather than relying only on external supply. The operation produced more than 100,000t of sulphuric acid in the first quarter of 2026, with annual output expected to reach 600,000-700,000 t/yr once the new smelter is fully ramped up.

That acid production gives Ivanhoe a strategic advantage. It can reduce exposure to imported acid costs while supporting copper output in a market where other DRC producers may face tighter reagent availability.

Diesel is another operational risk. Remote mines depend on diesel for haulage, power generation and logistics, especially where grid access is weak or transport routes are long.

Friedland said highly exposed mining firms should consider securing up to a year of diesel supply. He also argued that the DRC may be less vulnerable than some expect because refined products can arrive through India, Nigeria and southern Africa.

Still, the full operational impact may not yet be visible. Supply-chain shocks often appear first through higher costs, longer lead times and working-capital pressure before they become production losses.

This is why the copper market may be misreading risk. Visible inventories and annual balances can suggest moderate surplus, while the physical supply chain becomes more fragile beneath the surface.

A copper price above $13,000/t helps margins, but it does not immediately create acid, diesel, spare parts, qualified labour or new mine capacity. Mine investment still depends on permitting, capital cost, political risk and long development timelines.

AI, Data Centres and Critical Metals Raise Copper’s Strategic Value

Friedland linked copper’s long-term importance directly to electrification, cooling systems, data centres and artificial intelligence. These sectors are turning copper from a conventional industrial metal into a strategic infrastructure material.

AI data centres need large amounts of power infrastructure. That means more copper for grids, substations, transformers, cooling systems, cabling, backup power and electrical distribution.

The growth of AI also reinforces demand for metals beyond copper. Friedland highlighted gallium, scandium, dysprosium, rhenium and tantalum as thinly traded materials with low liquidity but high industrial dependence.

This is an important market signal. The next phase of industrial competition will not depend only on bulk metals. It will also depend on access to small-volume strategic materials that support semiconductors, aerospace, defence, magnets and high-performance alloys.

Copper remains the anchor metal because it connects electrification, grid expansion, industrial automation and data infrastructure. Friedland described copper as the “king of metals” because no large-scale energy transition can move without it.

However, copper’s strategic value also exposes the market to policy pressure. The US is beginning to understand mining’s national security role more clearly, especially as domestic supply concentration and import dependence become more visible.

Market participants expect moderate global copper surpluses this year, helped by last year’s supply windfall. But US physical balances are expected to remain tight, with the CME-LME arbitrage reopening to encourage flows into the country.

That regional tightness matters. Copper may look balanced globally, while specific markets face procurement pressure because of tariffs, logistics, exchange spreads, domestic manufacturing needs or strategic stockpiling.

The broader lesson is that copper pricing must account for supply-chain resilience, not only mine output. A mine that lacks acid, fuel or logistics capacity cannot deliver metal reliably, even if ore is available.

For investors, this strengthens the value of hard assets with low obsolescence. Mines, smelters, acid plants, power infrastructure and logistics corridors are becoming more valuable as supply chains become less predictable.

For manufacturers, copper procurement is becoming a strategic function. Buyers linked to grids, data centres, defence, cooling systems and energy infrastructure will need more secure supply agreements, not only exposure to exchange prices.

The Metalnomist Commentary

Friedland’s warning cuts through the headline copper rally: the market is pricing metal, but not enough supply-chain fragility. Copper’s next constraint may come less from ore availability and more from acid, diesel, logistics and the minor metals needed to build the electrified economy.

Chinese Cobalt Prices Expected to Decline Further in 2025 Amid Rising Supply and Weak Demand

Chinese Cobalt Manufacturing

Oversupply and Weak Demand to Push Cobalt Prices Lower

The Chinese cobalt market is set to experience further price declines in 2025, as increasing nickel and copper production, from which cobalt is a by-product, leads to an oversupply that buyers are struggling to absorb.

Currently, Chinese-origin cobalt metal traded in Europe has already seen significant pressure due to a lack of floor pricing on raw materials, a trend expected to persist into the new year. Market insiders suggest that cobalt prices could drop below $9/lb, as fully integrated Chinese producers view cobalt as a credit to their primary metal production, particularly nickel and copper.

For these refiners, cobalt is a secondary concern. As one trading firm explained, some Chinese producers operate with production costs as low as $4,000 per ton while selling at $9,000 per ton. Even if they incur a $50 million loss on cobalt, they may still profit significantly from copper production, which can generate up to $700 million in gains.

Chinese Refiners Likely to Continue Production at a Loss

Unlike non-Chinese refiners, which may curtail supply if cobalt prices fall below $9/lb, some Chinese integrated mining firms and refiners could continue refining hydroxide into metal at a loss-making $7-8/lb.

While there is speculation that some Chinese metal producers may attempt to negotiate floor prices in their contracts, it remains uncertain whether these efforts will succeed. Market participants are closely watching how these negotiations unfold, as they could provide some level of price support if successful.

Global Nickel and Copper Growth to Sustain Cobalt Oversupply

The primary factor driving cobalt’s oversupply is the continued expansion of nickel and copper production, as cobalt is a by-product of both metals.

• Nickel production is set to rise again in 2025 with the launch of new Class 1 nickel refineries in China and Indonesia. This will likely keep London Metal Exchange (LME) three-month official nickel prices within the $15,000-17,000 per ton range, significantly lower than the $30,000 per ton peak in early 2023.

• Copper production is also projected to increase due to expansions at mines such as Kamoa-Kakula in the Democratic Republic of Congo (DRC). Although cobalt sales represent only a minor portion of copper mining revenues, producers still aim to extract value from it as a credit.

Weakened Demand from EV and Chemicals Sectors Further Pressures Prices

While cobalt demand in China has surged by 40%, this has not been enough to counteract weakening demand in other regions, particularly in Europe:

• The electric vehicle (EV) sector in Europe has slowed down, leading to reduced demand for cathode active materials like cobalt.

• The European chemicals industry, particularly in Germany, has struggled due to rising energy costs and broader economic challenges.

Even if prices do increase, China has ample spare refining capacity and could use third-party tolling arrangements to process hydroxide into metal, further maintaining downward price pressure.

Peak Oversupply May Be Near, But Price Recovery Remains Uncertain

Some market participants believe that cobalt hydroxide oversupply may have already peaked. The shift towards lithium iron phosphate (LFP) batteries, which do not use cobalt, has significantly impacted the demand for nickel-cobalt-manganese (NCM) battery chemistries, leading to lower demand for cobalt sulfate and cobalt hydroxide.

However, despite this potential supply peak, weak demand across key industrial sectors suggests that cobalt prices are unlikely to see a strong recovery in the near term.

Conclusion

In 2025, Chinese cobalt prices are expected to remain under pressure due to rising nickel and copper production, ongoing oversupply, and weak demand from the European EV and chemicals sectors. While some believe that the cobalt market may be nearing peak oversupply, prices are unlikely to experience significant upward momentum unless demand rebounds sharply or supply reductions occur.

CNGR Begins Cobalt Metal Deliveries in China

CNGR, a leading Chinese producer of lithium-ion battery cathode active materials, has initiated cobalt metal deliveries from its new facility in Qinzhou, Guangxi province. This move marks a significant expansion in CNGR's product line, which began in June, and includes a production capacity of 2,000 tonnes per year of cobalt metal with a purity exceeding 99.99%. The facility also has the potential to boost its capacity by 50%.

CNGR’s operational processes involve transforming low-nickel matte into high-nickel matte, followed by the production of nickel sulphate and cobalt sulphate, eventually yielding nickel and cobalt metals. This strategic enhancement aligns with the surging domestic production of cobalt metal in China, which reached approximately 12,300 tonnes from January to May, more than double the previous year's output. This surge is attributed to a premium on metal over cobalt salts, even though recent market prices for 99.8% grade cobalt have fallen by nearly 10% due to abundant supplies and lower demand.

In 2023, CNGR’s production of cathode active material precursors saw a 22% increase, totaling 284,192 tonnes. This includes significant outputs of NCM ternary precursors, cobalt tetroxide, and iron phosphate. Additionally, in February, the London Metal Exchange approved the listing of nickel cathode produced by CNGR, marking another milestone for the company.

LME Market Structure Overhaul Aims to Boost Liquidity, Transparency, and Electronic Trading

LME

Phased Reforms Target Block Trades, Electronic Access, and OTC Incentives

The LME market structure overhaul is set to reshape metals trading dynamics over the next two years. The London Metal Exchange has published a detailed roadmap outlining structural reforms designed to enhance liquidity, increase price transparency, and encourage electronic trading through its LMEselect platform. Key components include new block trade thresholds, automated crossing, and adjusted incentives for exchange-based trading.

Phase One Targets Trading Efficiency and Fee Realignment

From 2025 through mid-2026, the LME will roll out metal-specific block thresholds, a new automated crossing mechanism, and fee reductions for certain daily spread trades. By revising the definition of short-dated carries and applying lower fees irrespective of execution method, the LME aims to shift activity from OTC to on-exchange venues. It will also launch a liquidity provider programme and introduce TAS trading and tick size optimisation.

Phase Two to Deliver Data Transparency and OTC Oversight

In late 2026, the second phase of the LME market structure overhaul will expand market data transparency. Planned initiatives include the publication of OTC and open interest data, and real-time visibility into inter-office risk transfers, subject to applicable waivers. These measures reflect the LME’s ongoing efforts to modernize its market infrastructure while preserving physical delivery integrity.

The Metalnomist Commentary

The LME market structure overhaul is a pivotal step toward aligning physical and electronic metals markets. As algorithmic trading and regulatory scrutiny intensify, the LME’s hybrid approach could redefine price discovery standards in global base metals.

Shanghai Futures Exchange Approves Second Huayou Nickel Brand

On June 17, the Shanghai Futures Exchange (SHFE) gave the green light for listing nickel cathode full plates produced by Huayou's second-phase facility in Zhejiang province, eastern China.

This nickel cathode, boasting a 99.96% purity, is manufactured at Huayou’s Quzhou plant, which has an annual production capacity of 30,000 tons and employs the electrowinning process. Previously, nickel cathodes from another Huayou facility in Quzhou, with a smaller capacity of 6,000 tons per year, were registered by SHFE in June 2023.

The London Metal Exchange had already approved the listing of two Huayou brands in July 2023 and February 2024.

Typically, brands registered with exchanges enjoy a premium over non-exchange-deliverable products due to their enhanced liquidity.

Marex Group Acquires LME Warehousing Firm Edgemere Amid Regulatory Pressures

Marex Group

Marex Group completed the acquisition of London Metal Exchange (LME)-registered warehousing company Edgemere Terminals Limited to expand its physical storage capabilities within the global metals ecosystem. The UK-headquartered metals and commodities broker announced the Marex Group Edgemere acquisition yesterday, adding warehousing and logistics services to its comprehensive LME trading operations. This Marex Group Edgemere deal reflects strategic vertical integration as regulatory pressures reshape the LME warehousing landscape and create consolidation opportunities.

LME Regulatory Changes Create Acquisition Opportunities

The LME implemented significant regulatory changes that increased financial pressure on approved warehouse operators across its global network. Exchange officials raised minimum capital adequacy requirements five-fold to £5 million ($6.46 million) from previous levels, creating substantial compliance burdens for smaller operators. Meanwhile, the LME doubled minimum insurance indemnity requirements to £1 million last year to protect the system against potential insolvencies.

These enhanced regulatory requirements opened acquisition opportunities for larger financial institutions with sufficient capital resources to meet new compliance standards. Smaller warehouse operators face difficult choices between raising additional capital or seeking buyers with deeper financial capacity. Therefore, the Marex Group Edgemere acquisition represents a consolidation trend driven by regulatory pressure rather than purely strategic considerations.

Strategic Vertical Integration Strengthens LME Ecosystem Position

Marex Group's warehousing acquisition enhances its competitive position within the LME ecosystem by offering integrated trading and physical storage services. The company can now provide clients with comprehensive metals trading, financing, and warehousing solutions under unified management. As a result, this vertical integration creates operational synergies and potentially reduces transaction costs for customers requiring both trading and storage services.

The Marex Group Edgemere deal follows geographical coordination signals, with Edgemere changing its registered address to Marex's London headquarters two months before the acquisition announcement. This administrative change suggested integration planning was already underway between the companies. However, the LME maintains relationships with various warehouse and logistics providers across its global network to ensure adequate physical storage capacity.

Physical warehousing represents a critical component of the LME's metals trading infrastructure, enabling market participants to store and deliver commodities according to exchange specifications. Marex's entry into warehousing operations strengthens its ability to serve institutional clients requiring integrated metals trading and logistics solutions. Consequently, the acquisition positions Marex Group as a more comprehensive service provider within the competitive metals brokerage landscape.

The Metalnomist Commentary

The Marex-Edgemere acquisition highlights how regulatory tightening can accelerate consolidation in specialized financial infrastructure sectors, particularly affecting smaller operators lacking sufficient capital resources. This trend toward vertical integration among metals trading firms reflects the growing importance of controlling physical logistics capabilities in an increasingly complex global commodities trading environment where operational efficiency and regulatory compliance create competitive advantages.