Nickel’s turbo-charged rally was snuffed out on Wednesday by a super-sized delivery of the battery metal on the London Metal Exchange (LME).
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The warranting of 20,760 metric tons was the largest single-day inflow of nickel since December 2019.
By the end of the day the LME three-month nickel price had fallen from a 19-month high of $18,800 per metric ton to $17,895.
Yet the sudden “arrival” of so much nickel shouldn’t have come as a surprise.
While LME registered nickel stocks had been flat-lining since September, off-warrant inventory had been steadily accumulating in LME warehouses in Singapore and the Taiwanese port of Kaohsiung, which accounted for most of Wednesday’s stocks action.
LME registered stocks have long been a notoriously unreliable price signal, often reflecting warehousing rather than metal dynamics.
Shifts in LME off-warrant inventory, metal that is sitting in an LME warehouse but not yet delivered to the market, are a useful tool for cutting through the noise.
Right now these shadow stocks are shining a light on very divergent supply dynamics within the LME metals pack, ranging from glut to shortfall.
NICKEL GLUT AND LEAD CHURN
LME stocks of nickel, both registered and off-warrant, rose by 57.6% to 367,310 tons over the course of 2025.
It was the largest increase among the core LME base metals, both in terms of sheer volume and relative to the size of the global market.
A sharp 34,000-ton jump in off-warrant inventory in December foreshadowed Wednesday’s surge in headline registered stocks.
The other LME metal in chronic oversupply is lead, which has become the metal of choice for stocks financiers looking to arbitrage warehousing deals.
The tussle for units, most of which are located in Singapore, has generated massive churn in registered stocks. Over a million tons of lead moved in and out of the system last year.
Masked by all that noise was a steady build in off-warrant stocks, which grew from 42,000 to 200,000 tons over the course of 2025.
That was much more significant than the marginal 2,875-ton decline in headline registered stocks and propelled total inventory to 438,853 tons, the highest in over a decade.
ALUMINIUM DEFICIT
Aluminium stocks have in the past been the battleground for titanic tugs-of-war between traders and warehouses, much of the action playing out at Malaysia’s Port Klang.
The metal churn hasn’t stopped. There was a huge single-day inflow of 102,275 tons to registered stocks as recently as October.
But the velocity of the Malaysian roundabout is muted relative to previous years.
Shadow stocks refer to metal inventories that are not officially registered on the London Metal Exchange (LME) but are still stored in warehouses linked to the exchange. These stocks often give early signs of supply pressure or tightness before it appears in official data.
In the case of nickel, shadow stocks have increased sharply in recent months. This rise shows that supply is much higher than demand. Large production from Indonesia and weak buying from industries like stainless steel and electric vehicles have added pressure. Because of this oversupply, nickel prices are struggling to move up and remain under stress.
On the other hand, zinc tells a different story. Shadow stocks for zinc are falling, which means available supply is reducing. Mine closures, lower output, and steady demand from the construction and infrastructure sectors are tightening the market. If this trend continues, zinc prices may see upward support in the coming months.
For traders and investors, LME shadow stocks are becoming an important tool. They help in understanding real market conditions beyond official warehouse data. Analysts say that while nickel may continue to face price weakness, zinc could benefit from supply shortages if demand stays strong.
Overall, the contrast between nickel and zinc highlights how different metals are reacting to global economic conditions. Keeping an eye on shadow stocks can help market participants make better and early decisions.
Disclaimer
This article is intended for educational purposes only. The views and opinions expressed are those of individual analysts or brokerage firms and do not represent the views of GoldSilverReports.com. Investors are strongly advised to consult certified financial experts before making any investment or trading decisions.
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