For most of the past decade, theyd traded between $10,000 and $20,000. But while the short squeeze has weighed on Tsingshan's . Tsingshan Group is the partner of Huayou that develops the nickel project. This matters beyond the cozy world of . Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. 5 000 MT. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. All Rights Reserved. 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. 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. All prices are listed in Australian Dollars. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Then came a geopolitical crisis that caught him unawares. For Xiangs big short position, that was painful. Stephen Engle reports. Why bet against nickel when you have a nickel business? At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Its not just a casino. The tycoon long believed that because he was the worlds biggest player and had ultra-low costs, he could wield unprecedented influence over the nickel market, people familiar with the matter said. Enter the code below to reset your password. Among them were some of the biggest names on Wall Street. This suggests a possible upside of 27.1% from the stock's current price. The LME is now very likely going to die a slow, self-inflicted death through the loss of confidence in it and its products, predicted Thompson in a tweet. . Furious investors and traders. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . Glencore Ordered to Pay $700 Million in US Over Bribery Case (Bloomberg) -- Glencore Plc was ordered by a federal judge in New York to pay $700 million as a criminal punishment for a global bribery scheme orchestrated by the Swiss-based commodities trading and mining giant.Most Read from BloombergElon Musk Regains His Spot as the World's Richest PersonHow to Get a Free Flight to Hong Kong in . Others in the market may also push up prices in anticipation of that short covering. The head of one London metals brokerage recalls feeling sick as he watched the moves, realizing what the spike in prices would mean for his company, the market, and the global metals industry. 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. Now, the traders watched with a mixture of horror and grim fascination as the price went skyward. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. MT. Tsingshan started building its short position last year in part because Xiang expected a nascent surge in nickel prices to fade, according to people familiar with the matter. Just after 6am, the price of nickel passed $US100,000 a tonne. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . 4 354 . But much of Chinas academic and business community did not believeRussia would attackits neighbor. In August 2021, Glencore increased its medium-term emission reduction target to a 50% reduction by 2035 on 2019 levels and introduced a new short-term target of a 15% reduction by 2026 on 2019 levels. 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. Inability to deliver the products was a big problem for Tsingshan, the analyst added, noting that the company has nickel iron, stainless steel, and nickel matte but noelectrolytic nickel, which is the type traded on the LME. Late Tuesday . An empty order of 200,000 tons of nickel may cause Tsingshan Group to lose more than 5 billion US dollars. 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. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Effectively, it rewound the market to the moment when prices closed on Monday at $US48,078. . Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. Related Article: Nickel price spike purely financial but Tsingshan effect could linger. It decided to cancel all the trades that took place on Tuesday morning some $US3.9 billion of them. (This account of events in the nickel market is based on dozens of interviews with people involved, many of whom requested anonymity because the matters are private.). 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. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metal the type deliverable on the LME. 21 962. Not everyone shared his pessimism about prices. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. Nickel is also used in certain types of steel which lower magnetic properties. Tsingshan Group placed a short nickel order, and the matter of being shorted by the opponent was brushed off. Glencore. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Remember, when prices move up, traders such as Xiang who have sold futures contracts face margin calls; they must put up more cash to cover potential losses. , Mar 23, 2022. Now the Chinese tycoon known as Big Shot must decide whether to unwind a wager that risks fueling more dramatic swings in one of the worlds most prized metals. Trafigura Group sold cargoes of nickel it now believes may not have contained any of the metal to buyers including a US trade finance firm and a state-owned Jack Farchy on LinkedIn: Trafigura's Non-Existent Nickel Was Bought by a US Firm By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Xiang himself had little interest in international news, the people said, and the growing speculation over a possible war was hard to track in China. Everything changed when Russia invaded Ukraine. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . Back Submit. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. Short Interest; Premarket Screener . Tsingshan mostlymakesstainless steelthat isused inthepetroleum, chemicals, auto,and other fields. Find the latest Glencore plc (GLNCY) stock quote, history, news and other vital information to help you with your stock trading and investing. Tsingshans were even larger, numbering about $US3 billion, according to a calculation based on its total short position which, even after Xiang had closed out a portion of the bet in previous weeks, was over 150,000 tonnes. The fallout was immediate. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. 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. Those moves sent nickel to a record high of more than $US100,000 ($136,000) a tonne on Tuesday before trading was suspended. Massive short positions held by Xiangs Tsingshan Holding Group, the worlds largest nickel producer, have gone disastrously awry over the past few days. Tsingshan accounted for about half that amount. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. The LME is now very likely going to die a slow, self-inflicted death through the loss of confidence in it and its products, predicted Thompson in a tweet. At 1 a.m. on Tuesday, the market opened. . In the short term, apackage of loansfrom Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Nickel. 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. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. Nickels 250% 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 theLondon Metal Exchangeto suspend trading for the first time in three decades. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. Nicknamed Big Shot in Chinese commodity circles, people who know him say he has absolute confidence in his convictions and doesnt hesitate to bet big on his visions for the future. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Xiang isnt just a financial trader making paper bets on price moves. 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. He went on to pioneer new methods for producing nickel and stainless steel that upended the markets and made his Tsingshan the worlds largest producer of both. Xiang wanted to increase Tsingshans production dramatically by producing so-called nickel matte for electric vehicle batteries. A year after the short squeeze that brought the LME to the brink of collapse, the nickel market remains barely functional, with trading volumes sharply lower and prices regularly experiencing wild . 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. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. Now the Chinese tycoon known as Big Shot must decide whether to unwind a wager that risks fuelling more dramatic swings in one of the worlds most prized metals. 6W - 9M. Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. The metal is found in all our homes as a key ingredient of stainless steel. Live from Dubai, connecting Asian markets to the European opens. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. 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. The total volume mined by Glencore in 2021 fell compared to 2020, in part due to supply chain problems and the closure of some mines. Vale is the world's largest producer of nickel, one of the most versatile metals in existence. articles a month for anyone to read, even non-subscribers! Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. 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, Chamberlaininsisted to Bloomberg TVon March 9 that the solvency of the LME itself was never in doubt. This type is different from the mainstream ferro-nickel and nickel pig iron. Then, as now, a key factor was the intervention of the exchange. 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. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. Nickels price moved sharply higher in the week after Russias invasion. A Glencore spokesman declined to comment. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. Shares in metal recycler Sims Metals hit an 11-year high of $19.55 today following a price target increase by UBS analyst Lee Power on Tuesday from $18.90 to $20.30. The LME suspended nickel-market trading on Tuesday and the Shanghai Futures Exchange followed suit a day later, after prices on Chinas top commodities bourse hit their daily upward limit. Provided short/mid/long/strategic schedules using Deswik. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. The company had plans to produce 850,000 tons of nickel in 2022, an increase of 40% in a year, according to a person briefed on them. MMC Norilsk Nickel Recent Development 11.3 Glencore 11.3.1 Glencore Company Detail 11.3.2 Glencore Business Overview 11.3.3 Glencore Nickel Mining . He started increasing his short position on the London Metal Exchange. 2W - 6W. I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. Including positions on the London Metal Exchange and bilateral bets with banks, Xiang still has short holdings in the region of 150,000 tonnes, the people said. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. While few observers believed Xiang could reach that level of production, he was confident. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. 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. Once its industrial complex reaches peak p. For participants in commodities exchanges, a price rally is not necessarily good news. (Bloomberg) -- A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after the metal surged more than 170% in two days, according to people familiar with the matter. 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 . Xiangs short position has now racked upbillions of dollars in losses. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Many producers, traders, and users of nickel with short positions on the LME were facing margin calls many times larger than they were prepared for. Your email address will not be published. . The LME made a near-unprecedented decision. Production 2019. Cliff Asness, founder ofAQR Capital Management,accused the LME, which was for more than a century owned by its members but in 2012 was sold to Hong Kong Exchanges & Clearing, of stealing money from market participants trading in good faith and giving it to Chinese nickel producers and their banks. LMEs Chamberlain defended canceling the trades. Born in 1958, Xiang founded his business more than 30 years ago as a workshop making frames for car doors and windows in Wenzhou, eastern China. He went on to pioneer new methods for producing nickel and stainless steel that upended the markets and made his Tsingshan the worlds largest producer of both. But the effects of the short squeeze are likely to be felt in other ways. Our fundamental responsibility is market stability, he told Bloomberg TV. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Nickel boosts the energy within batteries and, at the same time, allows battery makers to reduce the use of more expensive cobalt. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . But the effects of the short squeeze are likely to be felt in other ways. What does Tsingshan Group's rival, Glencore, do? Russia Aluminum Deal in Challenge to Glencore CNY228,810 ( USD36,235 ) a tonthe same day, other... Calls, they told the LME exchanges sometimes cancel trades when technology or... Mining and commodities company reported record pre-tax profits of more than 28bn in 2022 as! 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