So, as widely predicted, the nickel lawsuits are beginning to drop through the LME’s letterbox. Fun times ahead for the lawyers, I suspect, as it’s going to be an interesting argument. One thing I have to say here in the interests of clarity is that in my previous comments on this problem, I have suggested that the LME were aware of the size of the position built by the major short. That seems to have been incorrect, as at least a part of the whole was run as an OTC rather than an Exchange position, so the full size – in the book of one entity – was probably not visible.
However, that aside, the legal argument will in the end be between the LME rule book and the generally accepted principle that a contactual deal agreed between two consenting parties should not be open to post-event cancellation at the whim of the Exchange on which the trade took place. Mmm…as I say, it’s going to be an interesting ride through the courts.
On a different subject, energy prices continue to be (mostly upwardly) highly volatile. We have seen oil at higher levels than today’s, and yet the pump price of petrol at that time was lower. That is simply down to the $/£ exchange rate. Now, I am perfectly happy to apportion blame for that to Brexit, and its effect on the UK Pound, but actually that only tells half the story. I was in France over the last couple of weeks, and I paid just as much there as here for my fuel. The Euro is suffering against the dollar in a similar way to the pound; that, I think, is a reflection of the fact that, almost regardless of the true state of the US at any time, we do all still have a lingering belief in the ‘mighty dollar’. Rightly? Wrongly?
The third small item I wanted to mention has nothing to do with commodities/economics/politics, but should be marked. For those of my age group, there were three rugby players who stood head and shoulders above the rest. They were Gareth Edwards, Barry John and Phil Bennett. All three were Welsh at a period of sublime Welsh domination (and I say say that as a non-Welshman). The sad news came last Sunday evening that Phil Bennett had died, aged 73. I never met him, but by all accounts he was a thoroughly decent and honourable man, as well as playing wonderful rugby. And remember, when you see the old videos, they were playing with a leather ball which absorbed moisture and got progressively heavier, the grass was inches long – not the perfect short turf of today – and by the end of a game half the pitch was soggy mud rather than grass anyway. Bennett was one of the true greats, and we should cherish his memory.
I’m off on holiday again soon, so articles here will continue to be relatively sparse through the summer.