In This Article:
(Repeats Thursday's story with no changes to text)
* Non-Chinese face hurdles on Shanghai market
* CME has struggled to launch new metal futures
* China seeking more pricing power in global contracts
By Eric Onstad
LONDON, March 17 (Reuters) - Despite the turbulent, stop-start trading of nickel on the London Metal Exchange, frustrated investors who may want to shift their business elsewhere have found there are no quick and easy alternatives.
The 145-year-old institution suspended activity and cancelled trades last week due to volatility that saw prices double to above $100,000 a tonne within hours. A spate of technical glitches after trading resumed this week has left traders fuming.
Amid the chaos, some pointed to the Shanghai Futures Exchange (ShFE), where there have been few such interruptions to nickel trading, as a defacto benchmark.
But a lot would have to change for ShFE to set global reference prices.
Trading on ShFE is difficult for non-Chinese, who need an affiliation with a Chinese entity. Then there are differences in currency and language and adjustments for duty and VAT, traders said.
Shanghai also has a lot of small-scale retail speculators, whereas the LME is dominated by financial institutions, producers and industrial users.
"I don't think there's a quick fix. It's a real problem," said Tom Price, head of commodities strategy at Liberum.
"In the longer term the LME seems to be in lots of trouble."
The LME benchmark nickel contract slumped to $41,945 a tonne on Thursday, hitting its daily limit for the second day in a row.
Traders said it would probably continue to slide until it reached parity with the price of the metal in China at about $34,300 a tonne.
However, European industrial users were not flocking to Shanghai, one trader at a LME ring-dealing member said.
"I don't see any physical players pricing on ShFE, even the Chinese themselves, but longer term, the LME has to get its house in order," he said.
The LME called last week's situation "unprecedented".
"However, we fully recognise that we must consider taking action in order to prevent such a situation from happening again," a spokesperson said. "We will consider carefully any appropriate future steps we could take to further build market resilience."
ShFE was not immediately available for comment.
Price said that until orderly trading of the LME nickel contract resumes, some local physical buyers may need to somehow peg their business to exchange prices reported before the disruption.