New Singapore commodity exchange aims to launch EV nickel contract this year

Abaxx Technologies

24/08/2023 18:56

By Eric Onstad
       LONDON, Aug 24 (Reuters) - A new Singapore-based
commodities exchange aims to launch the world's first futures
contract for a type of nickel used in the booming electric
vehicles (EV) sector by the end of this year, an executive said
on Thursday.
    The Abaxx Commodities Exchange, which is getting its final
regulatory approvals in Singapore, plans to launch nickel
sulphate futures, the first such contract globally, Dan
McElduff, president of strategy and development, told Reuters.
    The exchange, owned by Canadian-listed Abaxx Technologies
Inc  ABXX.NLB , also plans to launch futures in liquefied
natural gas (LNG) and carbon.
    "It's unquestionable that this market needs more and better
price discovery and the best way to do that is with a
physically-settled futures contract," he said.
    "Our focus in starting was to not battle out with big
exchange groups in their core products but to focus on emerging
markets and we classify nickel sulphate as an emerging market."
    The existing nickel futures contracts on the London Metal
Exchange (LME) and the Shanghai Futures Exchange both trade in
Class 1 refined nickel. 
    Nickel sulphate is a form of nickel used in EV batteries, a
sector which is growing in importance.
    Instead of having a network of warehouses to store and
deliver physical metal like the LME, the new Abaxx nickel 
contract would facilitate delivery from seller to buyer, Abaxx
Chief Economist David Greely said. 
    Abaxx said it had consulted with 21 firms before coming up
with its nickel contract, including automakers, mining
companies, brokers and trading firms. It declined to identify
them due to confidentiality clauses.
    While stainless steel currently accounts for about
two-thirds of nickel use, batteries are due to account for 40%
of demand by 2030 from 15% today, according to UBS. 
    Volumes in the benchmark nickel contract on the LME, the
world's biggest venue for industrial metals trading, have slid
following a crisis in March last year when the exchange
suspended trading after a chaotic surge in prices. 
    Part of the reason for the disorderly prices on the LME last
year was that the bulk of nickel produced globally has shifted
to lower grade types such as nickel pig iron, which cannot be
delivered on the LME.
    In March, the 146-year-old LME launched sweeping measures to
revive its flagging nickel contract and said it would work with
China's Qianhai Mercantile Exchange (QME) to launch trading in
lower nickel grades.
    Both the LME and QME are owned by Hong Kong Exchanges and
Clearing  0388.HK . 

 (Reporting by Eric Onstad; Editing by Susan Fenton)
 ((eric.onstad@thomsonreuters.com; +44 20 7542 7093; Twitter https://twitter.com/reutersEricO;
 Reuters Messaging: eric.onstad.thomsonreuters.com@reuters.net))