London-based Global Commodities Holdings Limited (GCHL) and the Indonesian foreign investment company PT Industri Kapal Indonesia (PT IKI) have signed a memorandum of understanding on Indonesian nickel index development and marketing. The proposed indices will include both an Indonesian Nickel Ore Index (INOI) and an Indonesian Nickel Index (INI). 

This launch is expected to be game-changing as Indonesia is the world's largest nickel producer but doesn't have its own nickel index. Up-to-date pricing data from various market players will be used in order to increase neutrality. Futures exchanges may also utilise the indices when developing futures products. 

According to GCHL's announcement, the nickel indices are fully supported by the Indonesian Mining Association (IMA) and will be used as a tool for the Indonesian government to control and monitor nickel mines, as well as downstream activities.

"It will be used by all stakeholders as a reference price for transactions, budgeting, and forecasting," it says. 

The indices will also complement GCHL's goal to offer a platform, which will be open later this April, for Class 1 nickel purchasing and selling, Kallanish learns. 

GCHL says: "The Class 1 nickel pricing will be derived entirely from trades and qualifying bids/offers on the GCHL platform, and GCHL will additionally permit trading in the PT IKI Index materials."

Recently, the London Metal Exchange (LME) announced a two-year action plan, which will be adopted from the end of the second quarter. Part of this plan is focusing on reassessing margin requirements and launching new nickel contracts focusing on the Asian markets to improve liquidity. 

The LME will offer fast-track access and fee reductions for new Class 1 nickel products and remains open attitude in Class 2 nickel contract. It is working with Qianhai Mercantile Exchange, an HKEX company, in developing a China-based spot market for nickel sulphate and nickel matte to support Asian trade flows.