The London Metal Exchange (LME) has approved the GEM-NI1 brand, which constitutes good delivery against the LME’s Nickel contract with immediate effect.

The GEM-NI1 brand is the second to be listed under the LME’s new fast-track approval process given that Chinese nickel producer GEM only submitted an application to list on 17 August. GEM will produce full plate cathode from its plant in Jingmen City in Hubei province, China, with a capacity of 10ktpy Ni.

The approval follows fellow Chinese producer Huayou listing its HUAYOU brand on the LME earlier this year, a trend being replicated by other diversified nickel producers. Chinese producer CNGR recently lodged an application to list its full plate cathode.

The LME hopes that these new listings will increase nickel inventories on the exchange, thus boosting liquidity. This development is now paving the way for a surge of Class I nickel to hit the exchange as producers of Class II and intermediates look to take advantage of higher refined nickel prices on the LME. NPI and nickel sulphate have traded at significant discounts to LME prices during 2023 and a glut of intermediates from Indonesia, suitable for refining to LME deliverable products, could swell inventory levels.

At the beginning of the year, the LME began reporting stocks by origin. Nickel stocks continued a declining trend through most of the year, reaching a low of 35.5kt in May. However, stocks picked up through August and September amid weaker demand. Significantly, the first China-origin material reached LME warehouses during September. The September volume totalled 1,236t and represents the first full plate cathode listed by Huayou.

This additional nickel metal entering the market supports a more bearish view on prices held by many market participants as lower price forms of the metal drag down refined nickel prices to reduce the spread between lower purity forms of the metal and Class I nickel. However, as Project Blue has previously discussed, considerable risk remains over the ability of these newly-listed producers to consistently match the strict quality criteria demanded by sectors consuming the highest purity material (superalloys, plating etc).