ANALYSIS: Abaxx to complement nickel sulphate with lithium then gold

Singapore-based Abaxx Exchange, which launched the nickel contract on Friday and completed its first block trade with StoneX as broker on the same day, told FOW demand is coming from the trading side, with a lot of merchant firms showing interest in Abaxx’s nickel sulphate product.

“The nickel launch is really exciting for us as we have two very large firms that want to get involved in the first trades as well as clearing firms,” said Abaxx Exchange chief commercial officer Joe Raia (pictured) in an interview, referring to Traxys and HNK Alpha who traded five lots on Friday at a price of $14,600 ($12,042) per tonne of nickel, according to Abaxx Exchange.

“This is not surprising given this product represents the first nickel sulphate contract that is physically delivered outside of China and is US dollar denominated. This is a major structural change both in how the markets looks at this from a dollar-denominated perspective but also in that the contract is non-warehouse delivered, given the supply changes in China and it representing the main driver of demand for battery producing.”

Raia continued: “We still see demand for a non-China product, and that is why we are really excited as trading firms want to trade this product. We are definitely going to fill a niche or void in the marketplace right now.”

The latest product launch represents Abaxx Exchange’s first new contract since opening in late June with liquefied natural gas (LNG) and carbon futures and the group's first metals product.

Abaxx suggested in November it would launch gold futures in the first quarter of 2025 but the Singapore-based commodities market said it now plans to launch both gold and lithium carbonate futures before the end of March, with lithium carbonate going first.

“I think both contracts will be a great follow on to the nickel contract, as there is an extreme amount of demand for battery metals globally for lithium, while for gold, our optimism comes from the dislocation issues we see and in the structure of the markets, where we believe an Asia-based contract will be very well received,” Raia told FOW.

Speaking on a podcast this month, the chief executive of Abaxx Technologies said the nascent commodities market was eyeing more metals futures including gold and lithium contracts.

Last month, CME Group told FOW its recently-launched Chinese spodumene futures provide an opportunity for international investors to hedge lithium.

Back on nickel, David Greely, who is chief economist at Abaxx Exchange owner Abaxx Technologies, told FOW last week that Abaxx is more focused on onboarding clients than reporting trades in the early days.

“First trades might not occur on the first day. That is what we would ideally push for, but we don’t see it as a problem if it occurs a couple of days later,” said Greely in an interview. “There is a lot of coordination that has to happen and it has happened, which is the good thing, in terms of onboarding and seeing how hard the teams are working both on our side as an exchange and on the trading and clearing side.”

Nickel demand at the London Metal Exchange continued to recover last year from the turmoil in March 2022 when the LME controversially closed its market. In 2024, the HKEX-owned exchange saw nickel futures and options trading surge 58% on 2023's total to an average daily volume (ADV) of 65,094 contracts. FOW Data shows this was roughly at levels seen in March 2022 although still down from 85,639 contracts in ADV in February 2022.

Demand for nickel sulphate, a key component in EV batteries, is projected to grow at a compound annual rate of 22% from 2020 to 2030, according to Abaxx Exchange, “driven by the energy transition and the global push to secure critical supply chains”.

Abaxx Exchange’s president of strategy and development said investment in nickel will only increase “if all the plans are carried out as outlined in the US Inflation Reduction Act and in proposed legislation across Europe”.

“So there is absolutely a need for price discovery in nickel: what is the premium for developing these resources that should be on top of what the capacity in China is being priced at and for?” Daniel McElduff told FOW. “There is too much skin in the game for these kinds of price signals to not develop and develop well. If everybody has got China prices, then what good is that?”