20 March 2023 – The commodity exchange LME does not come to rest. After several tons of material, which had been declared as nickel in a European LME certified warehouse, turned out to be simple stones, this again shakes confidence in the system of the London commodity exchange. US real estate financing becomes cheaper. After announced Swiss major bank merger markets remain calm and move sideways at the start of the week.
LME: Stones instead of nickel – renewed incident at the commodity exchange
After it was discovered in an LME warehouse that only stones had been stored instead of nickel, the LME had to postpone the start of the Asian trading hours for nickel, which was actually planned for this week, by at least one week last Friday.
This Notice informs the market of the invalidation of nine nickel warrants, and announces a one-week postponement to the LME’s return to Asian trading hours nickel trading.
Source: LME, 23 044 Invalidation of Nine Nickel Warrants and Asian Hours Nickel Trading Postponement
Connection to Trafigura incident?
According to Trafigura, there is no connection between the possible nickel fraud case involving commodity trader Trafigura and Indian businessman Prateek Gupta and his company. However, this new incident already opens the door for speculation and rumors and thus further damages the reputation of the LME as a trustworthy and safe trading place.
Rotterdam warehouse of commodity exchange affected
Even though the LME did not want to give any details about the warehouse affected, it seems to be a warehouse in Rotterdam, the Netherlands. At least that is what Bloomberg reports, noting that this information is said to have come from sources familiar with the matter. []
Thorsten Gerber, CEO of Gerber Group, said today: “I am surprised that the EU steel producers and their lobby association EUROFER are not yet publicly up in arms about the LME’s cheating. A rogue who thinks something evil about it…?”
USA: Real estate financing becomes cheaper
Deutsche Bank reports today in its latest newsletter that recent developments in the financial markets are having a positive impact on real estate financing. Interest rates on 30-year loans have fallen by 0.6% percentage points.
Boost for US real estate markets possible
Deutsche Bank believes this could provide renewed impetus to US real estate markets, which would be beneficial to the US construction industry and should increase demand for key commodities such as cement, lumber, steel, stainless steel and aluminum.
Markets remain relaxed after major bank merger
The Asian markets have reacted at the start of the week with a sideways movement to the hectic action of the Swiss government and the bank UBS to take over the ailing Credit Suisse. The euro also hardly reacted to the forced marriage of the two major banks negotiated over the weekend. The important German stock index DAX fell briefly at the start of trading, but had almost made up for the losses an hour later.
Sentiment clearly more positive
Even though some analysts and short sellers had tried to spread a bad mood in advance, the reaction on the markets today is clearly more positive and relaxed.
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