Fastmarkets launches open market consultation on nickel MHP pricing

Fastmarkets invites all nickel market participants to provide feedback on its initiative to launch a price for the physical mixed-hydroxide-precipitate (MHP) market.

Specifically, Fastmarkets seeks feedback on proposed specification for an MHP payable indicator, the type of pricing mechanism used to perform price discovery for MHP and the products and locations in which MHP should be priced.

MHP is an intermediate nickel product produced from laterite nickel ores, which contains both nickel and a small percentage of cobalt. MHP is typically produced using a high-pressure acid leaching (HPAL) process.

The initiative reflects growing attention and focus on the MHP market, as one of the primary routes to nickel sulfate for the battery industry globally. Market participants from across the value chain have noted that MHP production and trade will increase amid the growing demand for nickel-rich batteries, particularly from the electric vehicle market.

This four-week open consultation begins on Monday August 15 and will close on September 12.

Type of pricing mechanism
Possible options include:

  • A payable - an indication of a percentage payable, based upon a benchmark exchange cash price such as the London Metal Exchange (LME) nickel price, or Shanghai Futures Exchange (SHFE) nickel price.
  • A price range – an assessed outright range provided by price discovery, based on the nickel and cobalt content of the material.

Nickel/cobalt contentFastmarkets proposes to include spot transactions for MHP with a nickel content of 30-40%, and a cobalt content of 1-4% and is seeking feedback on whether any other impurities or specifications should be taken into consideration when establishing a new price.

Quantity of MHP
Fastmarkets initially proposes to introduce a minimum tonnage requirement of 100 tonnes for any deal or offer reported, but welcomes feedback on whether this is an appropriate and reflective level for the spot MHP market, or if a different tonnage requirement would be more suitable.

Location and incoterms
Fastmarkets currently propose that the new price will be based on a cost-insurance-freight (cif) basis, China, Japan, and Korea to capture the most liquidity and best serve the market, but also invites feedback on whether an MHP price should be launched on the basis of any other locations globally where a demand market is emerging.

In addition, we are also open to discussions on the regions it will cover and any potential netbacks for liquidity captured outside of the specification.

To provide feedback on this open consultation, please contact Callum Perry by email at pricing@fastmarkets.com. Please add the subject heading ‘FAO: Callum Perry re MHP pricing.’

To see all Fastmarkets’ pricing methodology and specification documents go to https://www.fastmarkets.com/about-us/methodology.

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