Russian nickel traded in China for yuans

Russia’s largest mining company, MMC Norilsk Nickel PJSC, has been selling some of its metal in yuan to Chinese buyers at prices set in Shanghai, in a move that highlights how the conflict in Ukraine is changing the dynamics of global commodity flows and empowering China. According to a Bloomberg report, Nornickel, which accounts for approximately 7% of the world’s nickel supply, has been selling some spot volumes to China this year using a mix of London Metal Exchange (LME) and Shanghai Futures Exchange (SHFE) nickel prices, according to sources familiar with the matter. The volumes based on SHFE prices are being paid for in yuan, said the sources cited by Bloomberg.
The shift comes as Nornickel aims to increase sales to China this year due to a decrease in demand from some European buyers who are shunning Russian commodities. Nornickel’s Chinese customers are also pushing for long-term contracts to be linked to Shanghai prices. Negotiations are still ongoing, but they may also involve a mix of LME and SHFE pricing, the news agency said.
“China, the world’s largest consumer of commodities, has long pushed for greater control over pricing. Still, the vast majority of global commodity trade is still based on global benchmark prices in dollars. The shift to SHFE pricing was proposed by Chinese authorities some time ago, as they see it as a more stable benchmark than the LME, one of the people said,” the report adds.

Vladimir Malakhov, Rough&Polished