China’s LME Nickel Share Nearly Reaches 30%

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According to the latest origin stock report from the London Metal Exchange (LME), the proportion of Chinese nickel warrants in global LME warehouses surged to nearly 30% by the end of June. This marks a significant increase from 10% at the end of the previous quarter and 11% at the beginning of 2024.

At the end of June, on-warrant stocks of Chinese nickel totaled 25,152 tons, accounting for 27.9% of the total on-warrant LME inventory. Overall, total on-warrant LME stocks increased to 90,294 tons by the end of June, up 28.3% from the end of March and 56.3% since the beginning of the year. The most recently reported inventory stands at 95,982 tons, the highest level since October 2021.

Over the past year, the LME has approved an annual capacity of 171,600 tons for new Chinese nickel production. Major producers Huayou and CNGR have been sending Class 1 metal to the exchange’s Asian warehouses. Additionally, China is leveraging its excess production capacity of Class 2 nickel to convert lower-grade nickel into LME-deliverable nickel cathodes, establishing a strong presence in the European market.

Meanwhile, Russian Class 1 nickel, which has traditionally been the largest source of LME warrants, fell from 30% at the end of 2023 to 26.7% by the end of June amid geopolitical tensions. In April, the LME banned all Russian metals, including nickel produced after April 13, from its global warehouse system following new sanctions from the UK and US governments. Nickel produced before this date, designated as Class 1 warrants, remains deliverable and accounts for all 24,180 tons currently stored. The LME also halted deliveries of nickel products from the Harjavalta refinery in Finland, owned by Russia’s Norilsk Nickel, affecting the producer’s cathode and briquette brands. Finnish nickel comprised 1,308 tons of on-warrant LME inventory at the end of June.

In June, Australia held the largest amount of on-warrant LME nickel inventory at 26,322 tons. However, with China’s Class 1 production accelerating and Australia’s operations increasingly focused on care and maintenance, China is expected to take the lead in the coming months.

South African nickel stocks in LME warehouses totaled 7,734 tons at the end of June, while Canadian stocks stood at 2,388 tons.