June 1 (Reuters) - Eramet considers that the London Metal Exchange (LME) has lost its benchmark status for part of the nickel market to the Shanghai Metals Market, Bloomberg News quoted the head of the French mining company as saying.

An index produced by Shanghai Metals Market "has become the benchmark" for pricing ferronickel, the report quoted Eramet's Chair and Chief Executive Officer Christel Bories as saying.

"There's an increasing disconnect between the market fundamentals and the product that's physically stored in the LME warehouses," Bories said.

"The LME's problem is that it's pricing the pure ore. Meanwhile nickel is less and less used as a pure metal," Bories added.

Eramet says it is the world's second-largest producer of ferronickel, which accounts for just over 10% of global nickel output and is used to make stainless steel, the report added.

An Eramet spokesperson said that most of the group's nickel products were not indexed against LME prices, with only nickel ore in Indonesia tracking the LME.

Eramet has historically produced nickel in the French Pacific territory of New Caledonia but in recent years has rapidly expanded output in Indonesia at the Weda Bay mine in partnership with Chinese steel giant Tsingshan.

The LME launched two consultations on Wednesday on possible reforms in the wake of last year's crisis in nickel trading, saying it was following up on an action plan set out in March.

The move is part of sweeping reforms to boost investors' confidence in the wake of last's year's crisis, when the exchange suspended trading and annulled billions of dollars of deals. (Reporting by Deep Vakil in Bengaluru Editing by Christina Fincher)