BHP Billiton, the world's largest listed miner, said nickel contracts on the London Metal Exchange did not represent the spot market and reform was "long overdue", Reuters reported.
A fall in trading volumes since the nickel fiasco last year, when the London Metal Exchange closed for more than a week, has compounded problems at the world's largest and oldest metals forum.
LME nickel prices doubled to a record high above $100,000 a tonne on March 8 as a large number of short positions, or bets on lower prices, were cut, leading the exchange to cancel all metal trading for the day.
"The reform of the LME metal delivery rules is long overdue. The LME short squeeze highlights vulnerabilities that have existed for years, Huw McKay, vice president of market analysis and economics at BHP Billiton, said in the company's latest economic and commodities outlook released in Australia on Tuesday.
An LME spokesman said in an email that the exchange "recognises the structural shift taking place in nickel markets".
"We are committed to working with industry to ensure that LME's products meet the industry's evolving pricing and risk management needs... We will continue to explore ways to improve the contract specification, "the spokesperson said in an email.
A major component of stainless steel, nickel is now also a key material in the electric vehicle industry, used in the cathode components of batteries.
The global nickel trade was usually priced using the LME contract until March 2022, but concerns about the reliability of LME prices have led some producers and consumers to try to find alternatives.
"Right now, the reality is that the global price discovery mechanism, a key component of Energiewende, is not working well," Mr. Mackay said.
"The basic tension is that the exchanges that set the benchmark prices have moved further and further away from the physical clearing market, which is China," McKay added.
