The nickel market was anything but calm. One thing is sure: If Xiang can weather the storm, Tsingshans nickel-producing assets stand to benefit from the higher prices, offsetting losses from the short. A Glencore spokesman declined to comment. Baar, Zug, Switzerland. Traders and brokers on the open outcry pit at the London Metal Exchange. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee . While investors who sell stocks short want the price to drop, in commodity markets many producers, traders, and users take short positions as a hedge against losses on the physical commodities they hold in inventories. Since 1910, nickel and other metals have been refined, produced and exported from the production plant in Kristiansand. One thing is sure: If Xiang can weather the storm, Tsingshans nickel producing assets stand to benefit from the higher prices, offsetting losses from the short. Executives fromGoldman Sachs Group Inc.voiced their displeasure at the decision on a call with Chamberlain. (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. For participants in commodities exchanges, a price rally is not necessarily good news. Nickel rocketed to a record high above $100,000 a ton on Tuesday, driven in part by Tsingshan and its brokers activity, before trading was suspended. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. There are also traders making plans to abandon the LME nickel contract, a move that would reduce market liquidity, making it harder for everyone from miners to car companies to manage their exposure to prices and access financing. A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after this week's unprecedented price spike, according to people . On this day, however, metal traders were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. Harjavalta nickel smelter in Finland (Credit: Boliden). Xiang Guangda, the billionaire owner of Tsingshan Holding Group. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. Worse, the chaos was spreading to other markets: Zinc prices spiked 15 per cent in a few minutes to a record high, only to collapse again. Now they had to pay big margin calls on the exchange while receiving no margin from their client. . Everything changed when Russia invaded Ukraine. The LME made a near-unprecedented decision. 92 132 MT. Just after 6am, the price of nickel passed $US100,000 a tonne. Remember, when prices move up, traders like Xiang who have sold futures contracts face margin calls; they must put up more cash to cover potential losses. Glencore Nikkelverk AS has a modern and complex processing system. Credit: INF News.com. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . Cash and short-term investments. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. Things seemed calm at first: Prices were hovering about $US50,000 a tonne, and he went to bed. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. Mark Hansen, chief executive officer of Concord Resources. But much of Chinas academic and business community did not believeRussia would attackits neighbor. Canada Nickel Company Inc. $1.24. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. Then came a geopolitical crisis that caught him unawares. But much of Chinas academic and business community did not believe Russia would attack its neighbour. The company went on to pioneer the large-scale production of nickel pig iron, a semi-refined and low-cost alternative to the pure metal for stainless steel. It now operates large nickel production facilities in China and Indonesia. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Report this profile Report Report. When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. Nickel prices surged to an all-time high on Tuesday, up roughly 250% in just two days, and forcing the London Metal Exchange to close trading. Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. Coal Department. The fallout was immediate. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. 92 000 MT. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. , Mar 23, 2022. Golf's Greatest Holes: Golfing legend Paul McGinley takes television presenter Chris Hollins on a tour of the best golf courses in Ireland and Northern Ireland. And once again, this short squeeze racked up billions in losses for those involved. He started increasing his short position on the London Metal Exchange. He was awakened by a phone call at 5:30 a.m. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. Nickel is also used in certain types of steel which lower magnetic properties. . LME brokers and their clients were hit with margin call after margin call. The nickel market was anything but calm. Most analysts sided with Xiang, at least in the medium term, believing that nickel production led by Tsingshan and its competitors in Indonesia would outpace demand. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. To date, the company has sold a tonne of nickel for an average of $ 18,474. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. The spike was driven in large part by a short squeeze centered on Chinese tycoon Xiang Guangda, who hadamassed a big wagerthat nickel prices would fall through his companyTsingshan Holding Group Co.On Monday, a week after trading had been suspended, Xiang wasclose to securing a loan facilityfrom JPMorgan Chase & Co. and other banks that would allow him to maintain his short position and could lead to the market reopening. Activity . 3.28% . (via NewsDirect) Helix Resources Ltd (ASX:HLX) MD Mike Rosenstreich tells Proactive the company is ready to spin out its nickel and cobalt interests in the prolific Cobar Basin of NSW into a special-purpose vehicle aimed at maximising value for shareholders. In theory, there should be two options for this 200,000 tons of nickel short order: 1. . Our nickel operations are in Canada, Australia, Norway, and New . And when those wagers move violently in the opposite direction, they can be hit with huge margin calls, or requests to put down more cash to back their trades. LME brokers and their clients were hit with margin call after margin call. Nickel prices, however, has been moving in an uptrend for a long time. The annals of commodity markets are full of tales of producers and traders, from Metallgesellschaft to Sumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. MT. When it was flying towards $US100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerage Bands Financial and a former LME board member. Others in the market may also push up prices in anticipation of that short covering. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. Nickels price moved sharply higher in the week after Russias invasion. By now, the entire nickel industry was in crisis. Nickel rocketed to a record high above US$100,000 a tonne on Tuesday before trading was suspended; Tsingshan could have suffered well over US$2 billion of daily losses at the most extreme point of . Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Then on March 7, nickels price began its parabolic ascent, surging from $US30,000 a tonne to more than $US50,000. Mid Term. 21 962. . On this day, however, metal traders across the city were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. One resolution to the situation may be for Glencore and Xiang to strike a deal to use Glencores long positions to cancel out some of Xiangs short. The LME suspended nickel-market trading on Tuesday and the Shanghai Futures Exchangefollowed suita day later, after prices on Chinas top commodities bourse hit their daily upward limit. Nickel. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. The price move on March 8 created a systemic risk to the market, the LME said two days later. Project manager for transition of Sudbury INO from CAMP to Deswik. Because nickel resists high temperatures, it is used in special steel and superalloys intended for aircraft engines, among other applications. Tsingshan accounted for about half that amount. . Provided short/mid/long/strategic schedules using Deswik. Soaring coal and metal prices powered Swiss mining and trading firm Glencore to a net income of $5 billion in 2021, a notable recovery from its $1.9 billion loss in 2020. I'll discuss why. Explore the latest reports and results, including financial results, production reports and our annual report. Nickel is mainly used in the production of stainless steel because it improves its strength and resistance to corrosion. Mar 16, 2022 - 8.00am. Market speculation has it that Tsingshan has a short position of about 200,000 tons of nickel, which it cannot deliver due to a lack of spot product after being assailed and squeezed out by US and European commodity futures giants such as Glencore, China Securities Journal reported yesterday. Today, in addition to its electronic market, its one of the last exchanges where brokers still gather in person to yell orders at one another for part of the day. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. People forgot that this isnt a video game retailer; its an important physical commodity.. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . For a while, it was unclear which view of the market would prevail. Glencore's disclosure follows a forecast earlier this month that there needs to be greater investment in nickel production, even though the short-term picture suggests there will be a glut of the metal. Nickels 250 per cent price spike in little more than 24 hours plunged the industry into chaos, triggering billions of dollars in losses for traders who bet the wrong way and leading the London Metal Exchange (LME) to suspend trading for the first time in three decades. When prices rose above $20,000 he would consider shorting nickel, the people said, because his production costs in Indonesia were as low as $10,000 a ton. The LME canceled transactions and suspended trading Tuesday after nickel's price jumped 90% to $55,000 per metric ton Monday, and then leapt again to a record high of $100,000 the next day . That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered, in a bind. Neither party seems very keen on this idea, however. this week's short squeeze is nonetheless likely to push . For the LME to cancel nickel trades between willing buyers and sellers is unforgivable. Glencore is one of the largest miners in the world that supply copper and nickel, two of my essential CCLANGs for the future of electrification. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. Excellent coverage of an earth-shaking event. MINK. Tsingshan is in touch with relevant parties and has the support of Chinese government departments and leaders, he added. Still, the LME has weathered numerousscandalsbefore in its 145-year history, from a 1985crisis in the tin marketthat caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than $2 billion in losses. Others in the market may also push up prices anticipating that short covering. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. He was awakened by a phone call at 5.30am. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trimtheir bets. Then, as now, a key factor was the intervention of the exchange. 485,996 followers. The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. But Xiang must now decide what to do with those positions, which give him outsize influence on the price of a metal used in everything from electric-vehicle batteries to stainless-steel kitchen appliances. The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. Enter the code below to reset your password. We had a frenzy based on speculation that accelerated on Monday and Tuesday. The exchange had serious concerns about the ability of market participants to meet their resulting margin calls, raising the significant risk of multiple defaults. Despite that, Chamberlain insisted on March 9 that the solvency of the LME itself was never in doubt. Why bet against nickel when you have a nickel business? Its unclear whether he will get his way. Tsingshan needs to increase the contract margins or roll over the futures if it decides to keep the contracts, which would require a huge amount of cash, an analyst told Yicai Global. Anyone using the LME needs to understand that. Its unclear whether he will get his way. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Its participants are a mix of the industrial metals companies, which tap the market to offset their price risks, and hedge funds, which use it to speculate. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. Nickel prices doubled on Tuesday and briefly rose above a record $100,000 a tonne as banks and brokers rushed to close part of a huge position amassed by Xiang Guangda, the billionaire founder of . Poseidon Nickel is listed on the Australian Securities Exchange (ASX) and has a trailing 12-month revenue of around AUDC$256,000. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. 6W - 9M. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Si estn subiendo los predios de los metales y dedcuieto nuevas forulasparavas frmulas paraformar y tranformar los metales megustaria encontrar una empresa ,organizacin,para si le interereza ase un tratado denegosiar un trato demostraciones y prbarles yensearleslo que estudie transformaciones aliaciones dijitales y la fabricacionde. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. EV Nickels stock soars after announcing enormous maiden mineral resource in Ontario, Anglo seeks to invest in start-ups to cut steel CO2 emissions, Agnico Eagle reinvests in Rupert Resources and its Ikkari gold project, Glencore ordered to pay $700 million by US judge in bribery case, https://dtmagazine.com/money724-302022.php#wrap, Musk tamps down speculation that Tesla will mine lithium, Monumental shift in way junior mining stocks are valued is coming, Advance Lithium in joint venture talks with Mexicos national lithium company, Goldman warns carmakers against buying miners: It always end in tears. What does Tsingshan Group's rival, Glencore, do? How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. 1. But Xiang must now decide what to do with those positions, which give him outsize influence on the price of a metal used in everything from electric-vehicle batteries to stainless-steel kitchen appliances. Even at that level, clients of LME brokers had failed to pay some $500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. Located in Kristiansand, Nikkelverk is the largest nickel refinery in the western world producing high-quality nickel and cobalt. https://bbgvod-azure-us-east1-zenko.global.ssl.fastly.net/vod/vod/m/ODg0NDM2Mg/Q2xvdWRfNTgyODY2/3fb888db-fa8e-42e4-b488-726dae69584b_150.mp4, Nickel price spike purely financial but Tsingshan effect could linger, EV Nickels stock soars after announcing enormous maiden mineral resource in Ontario, Iron ore price jumps on China data, bullish steel demand outlook, Copper price rises as Chinas economy shows strong recovery, Gold price hits 1-week high on robust China economic data, Musk tamps down speculation that Tesla will mine lithium, Monumental shift in way junior mining stocks are valued is coming, Advance Lithium in joint venture talks with Mexicos national lithium company, Goldman warns carmakers against buying miners: It always end in tears. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. 2023 Glacier Media Group, All Rights Reserved. The fallout was immediate. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. Bloomberg. Among them were some of the biggest names on Wall Street. If it can weather the current storm, Tsingshan which recorded more than $40 billion in annual revenue over the past two years should be a prime beneficiary of higher nickel prices as the worlds top producer. Then, as now, a key factor was the intervention of the exchange. 4 354 . But the effects of the short squeeze are likely to be felt in other ways. Perth, Western Australia, Australia. Were working to restore it. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. Production 2019. Some traders and bankers have questioned whether a producer like Tsingshan, which has relatively low production costs and is active in all parts of the supply chain, really needs such a large hedging position. Resetting your password will log you out of all your active Yicai Global sessions. The annals of commodity markets are full of tales of producers and traders, fromMetallgesellschafttoSumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. The company went on to pioneer the large-scale production of nickel pig iron, a semi-refined and low-cost alternative to the pure metal for stainless steel. We produce some of the worlds purest nickel. Is, to make money when prices fall exported from the production of stainless steel because it improves its and... 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