Reuters article

An interesting article in Reuters, I didn't understand a lot of it. Here's an excerpt:

MARKET DISCONNECT

The physical nickel market is booming as it gears up to meet the new demand stream from electric vehicle batteries, but it is simultaneously losing the capacity to hedge its growing price exposure.

This disconnect has been building for several years. None of the nickel flowing from Indonesia, the world's new production hub, towards China's giant battery sector is in a form of the metal that can be delivered against either the LME or ShFE.

This mismatch of paper and physical markets was a key contributor to the March mayhem. Tsingshan Group's huge short position against its equally huge production stream was simply too big for a market defined by a shrinking Class I segment of the supply chain.

Events in March and the resulting drain in liquidity have accelerated the price fragmentation.

The long-term solution would be the evolution of different exchange-traded contracts for intermediate products such as ferro-nickel, mixed hydroxide payables or nickel sulphate.

Users would then have a financial structure within which to tailor their product-specific price exposure.