London Metal Exchange Recovery: Navigating Post-Nickel Crisis Turbulence

LME Recovery Post-Nickel Crisis: Strength and Reform in Focus

The London Metal Exchange (LME) has shown remarkable recovery since its 2022 nickel contract crisis. Trading volumes have rebounded to pre-crisis levels, signaling renewed confidence among market participants. New LME warehouses opened in Jeddah, Saudi Arabia, and Hong Kong, enhancing global supply chain access. Additionally, the open-outcry trading ring continues to attract key players like US broker Clear Street, defying predictions of its demise.

The LME continues reform efforts to strengthen market integrity. The Financial Conduct Authority (FCA) imposed a fine earlier this year but acknowledged LME’s cooperation and improvement steps. New block trade thresholds will direct liquidity towards electronic platforms, while the exchange adapts rules on over-the-counter (OTC) trading after pushback. These reforms aim to increase transparency and competitiveness without alienating industrial users.

The Focus on LME Metals and Market Dynamics

Physical metal supply turbulence benefits the LME, especially copper, the “Doctor Copper,” which regained bullish momentum in 2025. The LME introduced tougher lending rules to prevent market corners, especially in aluminum and copper, where supply chains face geopolitical pressures. These rules require entities with dominant positions to lend metal at capped rates, limiting market manipulation risks.

LME volumes continue to rise, with an 18% increase last year and a further 3% gain in the first nine months of 2025. Copper futures and options outperformed competitors like the CME, aided by shifting global inventories and trade tensions. Even cobalt trading surged, reaching record activity due to increased warehouse stock. The LME’s robust response and market adaptation reflect its critical role in global metals trading.

SuperMetalPrice Commentary:

The LME’s recovery from the nickel crisis demonstrates resilience and adaptive strategy under regulatory scrutiny. Its reforms, while cautious, balance industrial user needs with market transparency. Rising trading volumes and expanded warehouse networks signal sustained confidence in the LME as a global metals hub. However, ongoing geopolitical and supply chain disruptions demand continued vigilance. The exchange’s handling of dominant market positions and shift towards electronic trading platforms will be key to maintaining trust and stability in metals markets.