Trading Primary Nickel Futures on the LME
The Primary Nickel futures contract has been traded on the LME since 1979, and the exchange is the only global centre for nickel consumers and producers to hedge their market risks.
With strong economic expansion led by China and India, the demand for nickel is projected to remain strong going forward, with global supply unable to keep pace, despite its expansion.
World production of nickel is about 1.14 million metric tonnes (2001) and on June 10 2008, the seller price of 3 months primary nickel on the LME was $22,500 per mt.
You can now subscribe to the free Commodity Universe Ezine below, and get the latest articles on the commodity sector . Just your first name and email. It's as easy as 1-2-3! Over the past twelve months the price of 3m primary nickel has fallen about 47% (10 June 2007, 3m seller LME nickel was $43,000).
Trading Primary Nickel Futures
The LME Nickel contract, valued in dollars, can be cleared in US dollars, sterling, yen or euro. Lot sizes are for 6 tonnes with a tolerance of +/-2%.
This physical contract requires that the Primary Nickel be of purity not less than 99.80% with the chemical analysis conforming to the current ASTM specification.
Delivery dates for Primary nickel are:
As with grade A copper, primary aluminium and secondary aluminium, Primary Nickel futures are traded by open outcry on the LME floor.
Using a number of short sessions at the end of which a bell is rung, hence first ring and second ring.
The first ring (in first session) is at 12.15, lasting 5 minutes, while the second ring, which forms the basis of the Official price for the day, follows the 13.00 to 13.05 session. The extended kerb period is between 13.15 and 14.45.
A second session has two rings, 15.25 to 15.30 and 16.00 to 16.05, with a second kerb period from 16.15 to 16.45.
Alternatively, it is possible to trade Primary Nickel through an LME member using the electronic trading platform. Real Time prices are available using LME Live.
Nickel Sources, Production and Applications
A silvery white metal, nickel is found in various ores with iron, magnesium and sulphur.
The main global producers are in North America (24%) and Russia (37%), where the Norilsk deposits of Siberia predominate and where the metal is found in ores with palladium.
Others areas include Australia and Indonesia.
Its main use is as an alloy in stainless steel (65%) and it has applications in plating iron and brass such as in coinage, and forms other alloys with, for example, silver.
Nickel is also used as a catalyst in certain chemical reactions such as hydrogenation.
With a growing world demand for the metal, shortages of supply and potential new applications, the LME Primary Nickel futures contract will remain an important benchmark for this industrial metal.
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