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Commodity markets and questionable stories
Commodity markets and questionable stories

30 March 2022 – Commodity markets like to be influenced with questionable news. Especially with quotes from politicians. Nickel price rises significantly. Aluminium, copper and zinc prices rise. Global demand for nickel to rise between 8 to 12% in 2022. HKEX calls for independent review of nickel price spike by LME.

Commodity markets and questionable stories

Already in recent years, questionable news, especially about the Chinese commodity market, has been spreading. Currently, more and more questionable information is being distributed, which is clearly aimed at influencing the development on the commodity market – e.g. for nickel or aluminium – and artificially depressing prices.

In addition to press releases from industrial companies, politicians are often quoted at lobby events saying what the respective industry wants to hear. After all, it’s about votes.

However, the information launched that commodity prices could be further regulated was quickly undone by the hard facts on the commodity market.

Nickel is on the rise: Demand to rise by 20% in 2022

Having already fallen by almost 4% during the course of today’s trading session, nickel on the SHFE rapidly changed direction towards the end of the day, first offsetting the initial losses and then shooting up by more than 3% to currently stand at over $36,000 per tonne again.

LME nickel up 4% at the start of trading

The LME also started today with gains in nickel and opened with a narrow plus of 4%. Copper is also currently up by more than 1.6% and aluminium by as much as 2%. Zinc is also up strongly with a gain of 2.53%.

China: Significantly higher demand

This is probably due to the significant increase in demand for steel and stainless steel from the downstream sector in China. According to the latest data, the Chinese PMI increased significantly in March 2022, rising by more than 10 percentage points. The Chinese economy also reported positive figures for March in other respects. Production and new orders both increased by more than 10 percentage points from the previous month.

Global demand for battery nickel to increase by 20%

The demand for nickel had already increased significantly in 2021. This year, it is now expected to rise again strongly overall, by 8 to 12% depending on the data. In particular, demand for high-grade battery nickel could increase by 20%. This new information should also lead to an increase in the price of nickel, but also of other battery metals such as cobalt, lithium and manganese. The Chinese lithium price alone rose by more than 20% in March.

HKEX: LME to independently investigate nickel incident

The Hong Kong Exchange and Clearing (HKEX), the parent company of the London Metal Exchange (LME), has said that the LME will have the nickel incident independently reviewed.

“I’m sure the board of the LME will take the necessary steps to evaluate what are the lessons learned and how we can continue improving the market structure of the commodities market,” the CEO of HKEX told media yesterday.

The pressure from the parent company seems to have at least had an impact on the LME. Yesterday, the LME tried to bring an independent review of the incident into play as well.

How independent such a review will be in the end remains to be seen. Especially in view of the close interconnections within the financial sector. The only real consequence in our eyes would be the complete sale of the LME and the prohibition of share purchases by “insiders”.

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