Shanghai exchange to allow delivery of nickel briquettes amid EV push

BEIJING, May 8 (Reuters) - The Shanghai Futures Exchange (ShFE) said on Friday it would allow delivery of nickel briquettes against its nickel futures contracts later this year in response to rising demand for other forms of the metal, notably for electric vehicles (EVs).

The change, one of the biggest the Chinese commodities bourse has made to its nickel futures since their launch five years ago, will be implemented from Oct. 16 for contracts for November delivery onwards.

The ShFE has removed the requirement in its trading rules that refined nickel should be delivered in the form of plate-shaped cathodes, according to a statement on its website.

Briquettes are a smaller, brick-shaped form of nickel that can be dissolved into nickel sulphate, a chemical widely used in electric vehicle (EV) batteries. Nickel is also used to make stainless steel.

The London Metal Exchange already allows physical delivery of nickel in the form of cathodes, pellets and briquettes.

Explaining the rationale behind the move in a Q&A posted on the bourse’s website, an unidentified ShFE official said the use of nickel briquettes had increased significantly in recent years due to the rapid development of China’s EV industry, as had demand for “diversified nickel contract delivery products.”

Briquettes are an important raw material for batteries, “representing the direction of the industry’s future demand growth,” the official noted, adding market participants were widely consulted and had supported the switch.

Further details on deliverable brands and specifications will be announced separately, the official said.

Nickel inventories in warehouses monitored by the ShFE SNI-TOTAL-W rose by 1% from last week to 27,698 tonnes, exchange data released earlier on Friday showed. (Reporting by Tom Daly; additional reporting by Emily Chow in Shanghai; editing by Mark Potter)