China's Share of LME Nickel Stock Rises to Nearly 30%

China's share of nickel warrants in global London Metal Exchange (LME) warehouses surged to almost 30% at the end of June, according to the LME's latest country of origin stock report. This marks a significant increase from 10% at the end of the previous quarter and 11% at the start of 2024.

Chinese-origin nickel on-warrant stocks totaled 25,152 tons at the end of June, accounting for 27.9% of total on-warrant LME stocks. Overall, total on-warrant LME stocks reached 90,294 tons by the end of June, representing an increase of 28.3% from the end of March and 56.3% since the beginning of the year. Inventories were last reported at 95,982 tons, the highest level since October 2021.

The LME has approved the warranting of 171,600 tons per year of new Chinese nickel capacity over the past year. Major producers Huayou and CNGR have been sending shipments of Class 1 metal to the exchange's Asian warehouses. Additionally, China has utilized excess Class 2 capacity to convert low-grade nickel into LME-deliverable nickel cathode, positioning itself as a significant player in the European market.

Meanwhile, Russian-origin Class 1 nickel, which has traditionally been the largest source of LME warrants, declined from 30% at the end of 2023 to 26.7% at the end of June amid geopolitical tensions. In April, the LME banned all Russian metals, including nickel produced on or after April 13, from its global warehouse system following new sanctions by the UK and US governments. Nickel produced prior to this date, labeled as Type 1 warrants, remains eligible for delivery and currently makes up all 24,180 tons stored. The LME also suspended the delivery of nickel products from the Finland-based Harjavalta refinery, owned by Russia's Norilsk Nickel, affecting the producer's cathode and briquette brands. Finland-origin nickel made up 1,308 tons of LME on-warrant stocks at the end of June.

Australia was the largest source of LME on-warrant nickel stocks in June, with 26,322 tons. However, China is expected to take the lead in the coming months as its Class 1 output accelerates and Australia's loss-making operations increasingly enter care and maintenance.

South African-origin nickel in LME warehouses totaled 7,734 tons at the end of June, while Canadian material amounted to 2,388 tons.