Chinese stainless-steel and nickel producer Tsingshan Holding Group, led by chairman Xiang Guangda, had built a short position estimated at 150,000–200,000 tonnes — roughly five times global annual refined nickel production — when a short squeeze sent LME three-month nickel from around $29,000 per tonne on 7 March 2022 to an intraday high of $101,365 per tonne on 8 March, a move of over 270% in three trading days (Reuters, LME suspends nickel trading a day after prices see record run, 8 Mar 2022). The London Metal Exchange suspended nickel trading and controversially cancelled roughly $12 billion across about 9,000 trades executed from midnight that day, the exchange’s first trading suspension since the 1985 tin market collapse (Reuters, LME cancelled nickel trades to save Tsingshan, London court told, 20 Jun 2023; Wikipedia, LME Nickel — 2022 short squeeze). Trading resumed on 16 March 2022 with new daily price-move limits, initially set at 5% and later widened, a mechanism the LME subsequently extended to other base metals contracts (Business Insider, London Metal Exchange to restart nickel trading with price cap, 15 Mar 2022).
Hedge funds Elliott Associates and Jane Street sued the LME for a combined $472 million in damages over the cancelled trades, arguing the exchange acted unlawfully to protect a systemically important clearing member; UK courts upheld the LME’s authority to cancel trades in emergency conditions in rulings through 2023 and on appeal into 2025 (Wikipedia, LME Nickel — litigation summary). The episode is directly relevant to any nickel-backed token design: it demonstrates that the LME benchmark a token would reference is not merely a price feed but a market the exchange itself can suspend or retroactively alter in extremis, a tail risk that gold and silver benchmark tokens, with centuries of continuous fixing history, do not carry to the same degree.
LME nickel is a Class 1 contract, deliverable only as 99.8%-minimum-purity cathode, briquette, or pellet — but the material actually feeding the fastest-growing demand segment, EV battery precursors, increasingly originates as nickel pig iron (NPI) or mixed hydroxide precipitate (MHP) from Indonesian laterite ore, materials the LME contract does not accept for delivery. The Class 1 premium over NPI-equivalent nickel collapsed from over $4,000 per tonne in early 2025 to roughly $2,800 per tonne by June 2026 as Indonesian NPI supply oversupplied the market even as Class 1 tightened (Rzzro Intelligence, Nickel Class 1 premium collapses as EV slowdown weighs on demand, 25 Jun 2026). LME three-month nickel traded in a $15,000–17,000 per tonne range through the first half of 2026 before rallying to $20,000–23,000 per tonne by May 2026 on supply-discipline signals from Indonesia (Rzzro Intelligence, Nickel market analysis, May 2026). The International Nickel Study Group’s Class 1 deficit estimate widened to 142,000 tonnes for 2026, up from 108,000 tonnes in the fourth quarter of 2025, even as the broader NPI-inclusive nickel market remained in surplus — a bifurcation that makes a single "nickel price" an increasingly poor proxy for the metal a battery manufacturer actually needs (RWA Nickel, Nickel supply deficit widens, INSG data, 15 Apr 2026).
Indonesia’s Ministry of Energy and Mineral Resources (ESDM) cut the 2026 RKAB (annual mining work plan) nickel ore quota to roughly 250–270 million wet tonnes, down from 364–379 million wet tonnes approved in 2025 — a reduction of close to one-third — as part of a broader push to force greater domestic downstream processing rather than raw ore export (Rzzro Intelligence, Nickel market analysis, May 2026; Skillings, Nickel market outlook 2026: supply, HPAL, and price forecasts). A moratorium on new NPI and HPAL (high-pressure acid leach) smelter licenses without confirmed downstream value-add commitments has accompanied the ore-quota tightening, aiming to slow the overcapacity that had driven Class 1 premiums to multi-year lows.
PT Weda Bay Nickel, majority-owned by Tsingshan (51.3%) alongside Eramet (37.8%) and Indonesian state miner Antam (10%), and the single largest nickel mine on earth, had its 2026 RKAB quota slashed by 71% to just 12 million wet tonnes, forcing the operation into care-and-maintenance status by mid-May 2026 (Rzzro Intelligence, Nickel market analysis, May 2026, citing Eramet Q1 2026 disclosures). The scale of the cut at a single asset illustrates how concentrated Indonesian regulatory risk has become for the entire nickel supply chain: one ministry decision at one mine measurably moved global Class 1 deficit forecasts. Goldman Sachs responded by lifting its 2026 average nickel price forecast to $17,200 per tonne, explicitly citing Indonesian supply discipline as the driver.
Unlike copper or aluminium, LME nickel warehousing has not been the primary battleground for battery-grade supply — the bottleneck sits upstream, at the ore-quota and refining-capacity level in Indonesia, rather than at LME-listed delivery points. Hong Kong’s approval as an LME delivery location from 20 January 2025 included nickel among the metals eligible for storage at the initial approved facilities, positioning Asian warehousing closer to the Indonesian production base than the exchange’s legacy European and North American network (Bloomberg, LME approves Hong Kong as warehouse location to woo mainland, 20 Jan 2025). But because the LME contract remains Class 1-only, the geography of warehousing does not resolve the underlying grade mismatch: NPI and MHP produced in Indonesia still cannot be warranted directly against the exchange’s flagship contract.
Tezos-based platform metals.io launched xNi, a tokenized nickel product, around 26 June 2026, alongside its earlier copper token xCo, giving retail investors direct beneficial ownership of physical nickel held in custody rather than synthetic price exposure — described by coverage as the first such product to bring nickel ownership to retail investors at all (The Armchair Trader, Tokenised copper and nickel now available for retail investors). Custody runs through Archax, the UK Financial Conduct Authority-regulated digital-asset exchange and custodian, addressing the regulatory-custody gap that has slowed prior physical-metal tokenization efforts. The LME’s standard nickel contract lot size is six tonnes — worth well over $100,000 at 2026 prices — making direct retail ownership of a warehouse-standard lot impractical without fractionalization, which is precisely the gap xNi is designed to close.
Because LME warrants are the only nickel instrument with continuous, dematerialized, exchange-verified title records via the LMEsword electronic depository system, any token built on top of exchange infrastructure inherits the LME’s Class 1 specification by default — even though Class 1 material is a shrinking share of what actually flows into EV batteries. A genuinely battery-grade token would need either a bespoke off-exchange custody and verification chain for NPI/MHP intermediate products, or a new benchmark price series for battery-grade nickel that does not yet exist at LME or comparable exchange scale. No issuer has announced such a product as of mid-2026.
As with copper, storage and insurance costs on a low-value-density industrial metal make a buy-and-hold retail investment thesis weaker than for gold or silver; nickel’s primary tokenization opportunity is arguably in supply-chain traceability — verifying that the nickel feeding a specific battery cell originated from a mine meeting OECD due-diligence and EU Battery Regulation sourcing standards — rather than in fractional price speculation. That traceability use case remains unaddressed by both xNi and by chain-of-custody schemes at the mining level, representing the largest unfilled tokenization opportunity in the nickel value chain as of July 2026.