UK-based GCHL and PT IKI to Develop Nickel Indices, Potentially Changing the Landscape for Referencing Nickel Prices.

Mumbai, 12 April (Commoditiescontrol): UK-based Global Commodities Holdings Limited (GCHL) has signed an exclusive deal with Indonesia's PT Indeks Komoditas Indonesia (PT IKI) to develop and market indices for Indonesian nickel. According to industry sources, this deal could change the landscape for referencing nickel prices.
Indonesia is the world's largest nickel producer, accounting for 48% of the 3.3 million tonnes produced last year, but it has no indices. The indices developed under this partnership will be used as a reference for transactions, budgeting, and forecasting and as a tool for the Indonesian government to control and monitor nickel mines and downstream activities.
This development comes after the London Metal Exchange (LME) suspended nickel trading for over a week in March last year due to record-breaking price surges, leading consumers, producers, and traders to look for an alternative.
Metal industry sources believe that if Indonesia mandates using these indices to value exports for taxation purposes, it could become a de facto regulatory push to use the indices as a benchmark.
GCHL's platform, expected to go live later this month, will enable the buying and selling of class 1 nickel, and pricing will be derived entirely from trades and qualifying bids/offers on the platform.
The indices developed under this partnership will complement GCHL's plans to offer a class 1 nickel trading platform. The index will be based on the latest pricing data from nickel mines, smelters, traders, and consumers. In addition, GCHL will be responsible for identifying and managing the futures exchange relationships that will emerge for the various indices the commercial partners are developing.
Exchanges could use the indices to create futures that the industry could use to hedge their needs. Metal industry sources say that this development could be game-changing because the market is currently dominated by class 2 nickel, which comprises ferronickel and nickel pig iron (NPI), a lower-grade product used mainly for stainless steel, primarily produced in Indonesia.
Part of the problem for the world's largest metals trading forum is that the nickel that can be delivered against its contract, known as class 1, now amounts to only about 20% of the global market compared with 50% more than a decade ago. (By Commoditiescontrol Bureau; +91-9820130172)