Posted on 13 Apr 2023
London-based Global Commodities Holdings Limited (GCHL) and the Indonesian foreign investment company PT Industri Kapal Indonesia (PT IKI) have signed a Memorandum of Understanding (MoU) on developing Indonesian nickel indices. The indices will include an Indonesian Nickel Ore Index (INOI) and Indonesian Nickel Index (INI).
Indonesia is the world's largest nickel producer but does not have its own nickel index.
According to GCHL's announcement, the nickel indices are fully supported by the Indonesian Mining Association (IMA) and will be used as a tool for the Indonesian government to control and monitor nickel mines, as well as downstream activities. Up-to-date pricing data from various market players, including miners and smelters, traders, and consumers, will be used to generate the indices in order to increase neutrality.
"It will be used by all stakeholders as a reference price for transactions, budgeting, and forecasting," GCHL says. For example, when conducting export valuations, the indices may be used for taxation purposes. Futures exchanges may also utilise the indices when developing futures products.
The nickel indices are expected to come together with GCHL's platform focusing on purchasing and selling Class 1 nickel in the current Class 2 nickel-dominated market, Kallanish learns. Class 2 nickel mainly comprises of ferronickel and nickel pig iron (NPI), which is frequently used for stainless steel production.
Recently, the LME announced a two-year action plan which will be adopted from the end of the second quarter. Part of this plan is focusing on reassessing margin requirements and launching new nickel contracts focusing on Asian markets to improve liquidity.
The LME says it keeps an open attitude to a Class 2 nickel contract. It is working with Qianhai Mercantile Exchange in developing a China-based spot market for nickel sulphate and nickel matte to support Asian trade flows.
Source:Kallanish
