(The opinions expressed here are those of the author, a columnist for Reuters)

LONDON - The world of metals trading is changing and so too is the way metals are traded.

Politics and war have broken what were once highly globalised supply chains into more regionally diverse parts.

The metals world is drifting away ​from a single global benchmark set by the 149-year-old ⁠London Metal Exchange (LME), now owned by Hong Kong Exchanges and Clearing.

The Shanghai Futures Exchange's (ShFE) opening of its nickel contract to overseas firms in April is a sign of this changing reality.

Shanghai is already the ‌dominant force in establishing benchmark metals prices in China's domestic market.

Now ShFE is looking to extend that reach across the Asian region, capitalising on the Chinese nickel ecosystem that links mines in Indonesia with refineries on the Chinese mainland.

This is not a winner-takes-all ​struggle between London and Shanghai or indeed the CME Group in the United States.

The proposed cross-listing of Shanghai's flat steel contract in London shows there are opportunities for all in this more fractured trading landscape.

NICKEL BREAKOUT

The ShFE has been toying with opening ​up ​trading to international players for several years as part of Beijing's drive to internationalise the renminbi.

Nickel is an obvious choice for a trial run.

Thanks to Chinese investment, Indonesia has become the world's dominant supplier in the space of little more than a decade.

A wide array of nickel products flows to the Chinese mainland to feed the country's huge stainless steel and electric vehicle battery sectors.

The Sino-Indonesian nickel trade offers ⁠the perfect forum for a shift in regional pricing to China and the Chinese yuan.

It is also a timely booster for the Shanghai nickel contract, which took a harder volume hit than London after the2022 crisis, when a melt-up in prices forced both exchanges to suspend trading.

Shanghai nickel futures trading volumes tripled in the first half of this year relative to 2025, although the comparison is flattered by the 30.5 million metric tons traded in January, when markets were in the grip of feverish speculative excess.

How's this affected the LME?

London nickel futures volumes also rose by 22% year-on-year. Including options, nickel registered the strongest growth among the core LME base metal products in the January to ​June period.

So far, it seems to be ‌what the Chinese call ⁠a win-win situation.

However, it's also noticeable that while ⁠LME nickel stocks have topped out, Shanghai inventory has kept on building to levels last seen in 2017.

Surplus Chinese metal is now gravitating towards ShFE warehouses and away from LME storage, suggesting the emergence of two discrete physical pricing centers.

STEEL TIES

While ​ShFE is grabbing a share of the international nickel action, the LME is grabbing some of the Chinese steel action in the form of a U.S. dollar futures ‌contract settled against the Shanghai hot-rolled coil (HRC) steel contract. Trading is due to start in October.

The LME already has a Chinese HRC contract, settled ⁠against price reporting agency Argus' assessments of export cargoes in the Chinese port of Tianjin.

But volumes are dwarfed by Shanghai's domestic contract for the simple reason that China is by some margin the world's largest steel market.

The LME's China HRC contract traded 1.4 million tons of steel last year. The Shanghai contract traded 1.7 billion tons.

Just as Shanghai's nickel foray may be a template for other metals, so does this LME-ShFE steel tie-up look like a test run for future collaboration.

FRACTURING LANDSCAPE

This opening up of Chinese pricing is of course a reflection of the country's centrality to both production and demand across the metallic spectrum.

But the eastwards drift reinforces the sense of global markets becoming more regional markets.

Copper traders already know what that feels like. The CME's U.S. contract has diverged wildly from the LME price ever since President Donald Trump raised the prospect of U.S. import tariffs in February last year.

There are now two Doctor Coppers, one residing in Washington and one trying to gauge what's happening in the rest of the world. There may soon be three, if Shanghai goes international with its copper contract as well.

EVERYONE'S A WINNER?

As physical trade patterns realign, the scope for regional arbitrage increases, which seems to be what is already happening in the nickel market.

Globally, base metals trading volumes everywhere have been growing. The LME had ‌a record volume year in 2025 and turnover rose by another 18% year-on-year in the first six months of 2026.

Shanghai's base metals ⁠contracts all saw significantly increased activity in the first half of the year with the single exception of zinc.

CME, meanwhile, is enticing retail investors ​into the metals space.

Its micro copper contract saw volumes jump by 76% year-on-year in the first half of 2026. Turnover reached 3.5 million tons even though the contract is a tenth the size of its flagship contract.

Trading activity on the CME's weekly copper options suite has increased more than fourfold this year relative to last.

Rather than a fight for a share of a static pie, the world's big three metals exchanges appear to be benefiting equally from an expanding pie as more participants trade ​more metal in more parts of ‌the world.

(The opinions expressed here are those of Andy Home, a columnist for Reuters.) Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global ⁠financial commentary. Follow ROI on LinkedIn, and X. And listen to the Morning Bid daily ​podcast on Apple, Spotify, or the Reuters app. Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.

(Writing by Andy Home; Editing by Marguerita Choy)