LME Nickel Case: Now it gets serious
LME Nickel Case: Now it gets serious

20 June 2023 – It is getting serious in the case against the LME for cancelled nickel trades from March 2022. The two most prominent lawsuits, which may also point the way for all others, are scheduled for hearing starting today, Tuesday. Asian inflation rates close to 2%, Eurozone and United States also perform positively. And Taiwanese stainless steel market is recovering due to significantly dropped inventories at downstream buyers and distributors.

LME Nickel Case: Now it gets serious

As of today, Tuesday, things are getting serious for the LME commodity exchange. The first hearing on the nickel incident from March 2023 before an English court is scheduled. As a brief reminder, nickel prices had risen to over $100,000 per ton in March 2023, due to which the LME had intervened in trading, stopped it and cancelled all contracts already concluded – with a total value of over $12 billion.

Action for damages of 472 million dollars

As a result, several renowned traders and hedge funds had filed lawsuits. The most prominent of these are hedge funds Elliott Associates and Jane Street Global Trading, which together sued the LME for 472 million dollars in damages. The allegation is that the LME failed to fulfill its responsibilities and failed to properly investigate the chaotic nickel prices, whether the market was behaving rationally, and what harm the decision to cancel trading would cause to some market participants.

The LME, of course, counters accordingly, assuring that everything would have been within the rules of the commodity exchange and that damage of more than $20 billion would have been avoided as a result.

Intervention in free trade

Elliott Associates and its boss Paul Singer are known for their willingness to fight for their rights. This can be seen, for example, in a case they won against the government of Argentina for $2 billion, which dragged on for 15 years and probably culminated in the seizure of an Argentine warship.

Singer had said a very true sentence to Bloomberg years ago, “If you don’t defend your rights, what do you have?”

Asian inflation rates near 2% target.

Inflation rates in Asia fell to 2.1% in May. The lowest in 20 months. Lower prices for energy, key commodities and food have helped Asian economies the most. As a result, inflation rates are reaching the central banks’ target of 2%. If Beijing’s monetary and fiscal stimulus can continue to invigorate the recent recovery phase, this could benefit the entire region and give the Asian market a further boost.

World trade gains momentum

There is good news on inflation developments in both the euro zone and the United States. Producer prices there rose much more slowly than in the previous year, by just 1.0 and 1.1 percent respectively. The New York Fed’s Global Supply Chain Pressure Index also fell in May to its lowest level since 1997, mainly due to improvements in the United Kingdom and Taiwan. However, the index deteriorated in the eurozone due to longer delivery times. Nevertheless, supply chains in all regions worldwide are performing better than the long-term average.

The positive performance of the index is also another good sign for China, which was at the center of disruption to global value chains during the Corona pandemic. Especially since U.S. Secretary of State Antony Blinken’s visit is just the prelude to a series of visits by U.S. government officials to Beijing that will focus on trade in particular.

Taiwan’s stainless steel market recovers due to increased nickel prices

Taiwan’s stainless steel market has continued to recover due to low nickel inventories and a nickel price around $23,000/MT. Recently, prices in Taiwan received a boost due to significantly lower inventories at downstream buyers and distributors. Some Taiwanese stainless steel producers have already announced price increases.

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