Benchmark begins public consultation on increasing nickel pricing to semi-monthly frequency, changes to MHP pricing mechanisms

Benchmark Mineral Intelligence announced today that it has started a formal public consultation on changes to its Nickel Price Assessment Methodology.

Increased Frequency

Growing demand for nickel chemicals from the lithium ion battery industry has increased the volume and frequency of materials being traded, creating more price volatility over a short period of time, allowing for more regular price publication.

Benchmark proposes to move three of its price assessments from monthly to semi-monthly frequency to give a more comprehensive assessment of price trends.

Higher frequency publication is considered for nickel sulphate, EXW China basis, nickel sulphate, CIF Asia (normalised) basis, and mixed hydroxide precipitate (MHP), CIF Asia basis.

Following feedback and discussion with a number of market participants, Benchmark proposes to increase the regularity of its nickel sulphate (Chinese and normalised CIF Asia) and MHP pricing to semi-monthly, to be published on the 15th of the month (or the closest working day following the 15th) and the final working day of the month, by 4pm (London).

As the lithium ion battery industry continues to develop, the frequency and volume of battery material trading is increasing. To give an accurate and comprehensive assessment of price movements, the frequency with which Benchmark publishes prices must also increase.

Evolution of MHP Pricing Mechanisms

Nickel feedstock for the battery market will continue to move towards MHP and away from class 1 nickel metal due to the increased availability of the prior. As such, the supply-demand dynamics are becoming increasingly estranged from the LME price, which more closely reflects industrial demand than battery.

This has resulted in an expansion of the pricing mechanisms being applied to MHP in the spot market. The historical mechanism of MHP trading as a payable to the LME nickel price is still a feature in the market but traders have employed alternative pricing mechanisms in recent months, in a bid to better mitigate risk and manage volatility.

Benchmark is proposing changing the language and price inputs considered in its pricing methodology from “MHP transactions are typically negotiated as a percentage payable to the prevailing LME nickel metal price on a metric tonne basis” to “MHP transactions are negotiated via a number of different routes. These include a percentage payable to the LME nickel price, a currency denominated value (usually USD or RMB), a reverse calculation from the nickel sulphate price, and other credible pricing mechanisms utilised by traders”.

As a result, Benchmark is seeking feedback on its plans to publish MHP prices as both a comparative payable level and a USD denominated price. In some cases, payables may be derived from a dollar price and vice versa.

Benchmark Price Assessments – contact us:

The proposed changes would impact three grades currently collected by Benchmark:

Nickel sulphate, EXW China, ≥22% NiSO4

Nickel sulphate, CIF Asia, ≥22% NiSO4

Nickel MHP, CIF Asia, ≥35% payable to LME

Benchmark invites feedback from active market participants by the latest 12 November 2023.

Please contact any Benchmark team member with feedback or email prices@benchmarkminerals.com.