LME Sees Record Activity in 2024 as Nickel Market Rebounds
The London Metal Exchange (LME) has fully recovered from its 2022 nickel crisis, achieving its highest trading volumes since 2015 and the fourth largest on record. Average daily volumes reached 664,698 lots in 2024, an 18.2% increase from 2023, with nickel trading jumping 58.8% year-on-year to levels last seen in 2021 before the market meltdown.
The recovery has been bolstered by a sharp rise in LME nickel inventories and renewed investor interest in industrial metals. Nickel stocks, both on-warrant and off-warrant, climbed to nearly 230,000 metric tons by November 2024, up from under 40,000 in May 2023. This improved stock liquidity has restored confidence and contributed to higher trading volumes.
Across the LME, total metal inventories grew to 2.2 million tons by the end of November, an increase of 505,000 tons since the start of 2024 and more than double 2022 levels. Increased inventory has driven more financing and arbitrage opportunities, particularly for aluminum and zinc, further boosting activity across the exchange’s core contracts.
Investor Trends and Emerging Competition: Investor interest surged in 2024, driven by the clean energy narrative. Funds held record long positions in tin contracts in September, while copper trading spiked during the first half of the year amid record-high prices. Retail investors also entered the market, with the CME’s micro copper contract volumes doubling for the second consecutive year, equating to over 3.3 million tons in 2024.
However, fund activity tapered in the latter half of 2024 as metals lost momentum, partly due to a strengthening US dollar and a robust US stock market. December saw a contraction in LME volumes for the first time since March 2023.
The LME’s dominance in metals pricing is increasingly challenged by competitors. The Shanghai Futures Exchange (ShFE) has expanded its international reach, launching new contracts for nickel, tin, and alumina. CME Group’s lithium hydroxide and cobalt contracts also posted significant growth in 2024, with lithium hydroxide volumes reaching 91,094 lots, a 348% increase from 2023.
Nickel Contract Innovations: Nickel remains a key focus for global exchanges. The LME has approved six new nickel brands for good delivery, five from China and one from Indonesia. These additions have aligned stocks more closely with market dynamics, enhancing trade liquidity.
New players like Abaxx Commodity Exchange and Global Commodities Holdings (GCH) are also entering the nickel market. Abaxx recently launched a nickel sulphate contract, while GCH announced plans for a physical nickel contract in Rotterdam. These developments highlight growing competition and innovation in nickel trading.
