Turmoil in the record trade as nickel market suspended

THE chaos at the London Metal Exchange that saw the nickel market suspended for a week has had at least one unusual side effect – the £100 million vinyl record industry is in turmoil.

Music insiders say at least some of the small number of vinyl manufacturers have had to suspend new orders because nickel is essential to the process.

Last Tuesday the London Metal Exchange, one of the City’s vital cogs, halted all nickel trading due to what it said was a disorderly market.

The price of the metal doubled to more than $100,000 a tonne in just hours. Some pointed the finger at Xiang Guangda, a Chinese tycoon desperately trying to cover $2 billion of bets on the price falling. As the market moved against him, he had to buy furiously.

Trading has been suspended since then, and is due to begin again tomorrow, with certain price restrictions in place.

But the nickel crisis has caused turmoil in what was a resurgent industry.

Last year sales of records surpassed those of CDs for the first time since the 1980s.

The revival of classic LPs was heralded by music buffs, with sales heading towards £100 million a year.

James Stafford from Republic of Music, a Brighton based, independent music sales and distribution company, says: “The vinyl market is being hit from all directions. Demand’s been creeping up for years. Most people expected the bubble to burst at some point but COVID tipped it over the edge - lots of bands relying on physical music and merchandise sales while they couldn’t tour - and lots of music fans spending disposable income on all this stuff as they can’t go out to pubs and gigs.”

The trouble is that the supply of vinyl is fixed, as very few new players have entered the market.

Last November some in the industry said that the printing of 500,000 copies of Adele’s album 30 on vinyl meant other artists simply could not get their own work on record.

Ed Sheeran said he had to race to get his own new album out before Adele’s made it impossible.

Stafford said: “So production lead time has increased from 8 weeks to 9 months or more. Some small plants with one or two presses have opened up in the UK but their output is so small as to be irrelevant to the big picture.”

Nickel is critical to the first part of production -- it is needed to make the stampers that actually press the records.