Nickel Trading Surge Drives LME Volume Growth in 2024

LME Nickel

Average daily volumes (ADV) for futures and options traded on the London Metal Exchange (LME)—including aluminum, copper, nickel, zinc, lead, and tin—rose by nearly a fifth in 2024, reaching the fourth-highest level on record, the exchange reported.  The LME recorded ADV of 664,698 lots, up 18.2% compared to 2023. This surge was primarily fueled by a dramatic increase in nickel derivatives trading, which jumped by 58.8% to 65,094 lots, approaching 2021 levels.  Trading volumes had been suppressed in 2022 and 2023 following a short squeeze in Q1 2022 that led to a brief trading suspension and a disconnect between prices and physical fundamentals. The 2024 surge signals a substantial return of both speculative trading and hedging activity.

Increased Nickel Availability and Shift in Stock Origins

The annual volume for nickel also benefited from improved availability in 2024, following the registration of four new brands, originating from China and Indonesia. This led to a sharp increase in stocks held in LME warehouses. On-warrant LME nickel stocks closed the year at 148,674 tonnes, more than doubling from 57,780 tonnes at the end of 2023.  Furthermore, 2024 saw a shift in the origin of nickel stocks in LME warehouses.  Chinese-origin nickel stocks now represent the majority of warrants, replacing Russian and/or Australian stocks. As of November, Chinese-origin nickel comprised 42% of all LME nickel stocks, up from 11% at the end of 2023.

Other Metals See Increased Trading Volumes

Trading in other metals contracts also saw growth in 2024. Tin contracts ADV rose by 25.9% to 6,284 lots, while zinc ADV increased by 16.9% to 104,318 lots. Copper and aluminum ADV saw increases of 10% and 15.8%, reaching 152,291 lots and 262,390 lots, respectively. Lead contract ADV also rose by 18.2% to 68,565 lots, the LME stated.