For Xiangs big short position, that was painful. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. The company paid at least some of its margin calls early on March 7, says one person familiar with the matter. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. I'll discuss why. Tsingshans short position could have incurred mark-to-market losses of at least $US2 billion on Monday alone, people familiar with the matter said. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. He was awakened by a phone call at 5:30 a.m. , Mar 23, 2022. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trimtheir bets. Credit: INF News.com. Nickel prices usually move a few hundred dollars per tonne in a day. . Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. The LME made a near-unprecedented decision. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Then, as now, a key factor was the intervention of the exchange. 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. 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. 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. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . 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. Activity . Charged with maximising the value of Glencore's physical nickel assets across the global portfolio through supporting collaboration efforts to manage risk and improve operability and performance. Glencore Nickel. It marked the first major market failure sinceRussias invasion of Ukrainejolted global markets, showing how the removal of one of the worlds largest exporters of resources from the financial system in the space of weeks is having ripple effects across the world. Our nickel operations are in Canada, Australia, Norway, and New . We have interests in a range of mining assets on four continents. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. . 2023 Glacier Media Group, All Rights Reserved. When prices rose above $US20,000 he would consider shorting nickel, the people said, because his production costs in Indonesia were as low as $US10,000 a tonne. Related Article: Nickel price spike purely financial but Tsingshan effect could linger. Your password has been changed successfully. It was 5.42 am on March 8 in London when the nickel market broke. For the LME, the future isunclear. Everything changed when Russia invaded Ukraine on February 24. Once its industrial complex reaches peak p. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. But much of Chinas academic and business community did not believeRussia would attackits neighbor. The price move on March 8 created a systemic risk to the market, the LME said two days later. Nickel prices had been rising for weeks, amid fears that supplies from Russia the largest exporter of refined nickel would be disrupted if the countryinvaded Ukraine. The nickel market was anything but calm. (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. 92 132 MT. The paper loss stood at $8 billion on Monday, before violent moves in nickel prices led the London Metal Exchange to suspend trading in the metal on Tuesday, one of the people said. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Some market rumors are circulating that Glencore might squeeze Tsingshan on LME Nickel for its 60% stake in a nickel mine in Indonesia. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. 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. Then on March 7, nickels price began its parabolic ascent, surging from $30,000 a ton to more than $50,000. Glencore's original trading business is still a powerhouse and is . For the LME to cancel nickel trades between willing buyers and sellers is unforgivable. Undeterred, the Chinese tycoon has told banks he wants to maintain his position, and has asked them to keep funding him despite the losses. 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. Your email address will not be published. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. 6W - 9M. Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. A market that many veterans simply describe as "broken." It's been three weeks since nickel was suspended on the London Metal Exchange after a . Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. All prices are listed in Australian Dollars. 485,996 followers. Share. We produce some of the worlds purest nickel. Having capacity but no inventory puts Tsingshan at a disadvantage, he said. MINK. When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. (Podcast). Strong passwords include numbers,letters,and special characters. this week's short squeeze is nonetheless likely to push . (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.). Live from Dubai, connecting Asian markets to the European opens. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. Sign up to get it every weekday morning. Xiang has told his banks and brokers that he still thinks the nickel price will fall andwants to keephis short position, Bloomberg reported on Thursday, citing people familiar with the matter. Even at that level, clients of LME brokers had failed to pay some $US500 million of margin calls in relation to their short positions on the exchange, says a person familiar with the matter. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. For a while, it was unclear which view of the market would prevail. Now they had to pay big margin calls on the exchange while receiving no margin from their client. 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. Short Interest; Premarket Screener . But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. Since 1910, nickel and other metals have been refined, produced and exported from the production plant in Kristiansand. Some aggrieved traders are already preparing to take legal action against the exchange. The fallout was immediate. But its obligations dwarfed its available cash and bank credit. Nickel prices usually move a few hundred dollars per ton in a day. This matters beyond the cozy world of . The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. For Xiangs big short position, that was painful. I see all automakers within a short time creating their own 4680 . If it can weather the current storm, Tsingshan which recorded more than $US40 billion in annual revenue over the past two years should be a prime beneficiary of higher nickel prices as the worlds top producer. Login. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. Tsingshan is an excellent Chinese enterprise.. And once again, this short squeeze racked up billions in losses for those involved. Glencore Nikkelverk is an important part of the green shift. It traded briefly above $100,000 a ton early on Tuesday. 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. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Executives at Tower Research Capital, one of Wall Streets oldest electronic market-makers, reined in its trading activity on the LME and put its membership in the exchangeunder review. For most of the past decade, theyd traded between $10,000 and $20,000. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Get in touch with us now. Your email address will not be published. Just after 6am, the price of nickel passed $US100,000 a tonne. Executives at Tower Research Capital, one of Wall Streets oldest electronic market-makers, reined in its trading activity on the LME and put its membership in the exchange under review. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. 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. In the meantime, the nickel market is on ice, with traders unable to exit their positions, and many billions of dollars tied up in margin calls. Cobalt. People forgot that this isnt a video game retailer; its an important physical commodity.. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. Project manager for transition of Sudbury INO from CAMP to Deswik. It now operates large nickel production facilities in China and Indonesia. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, chief executive officer of trading houseConcord Resources Ltd.We had a frenzy based on speculation that accelerated on Monday and Tuesday. 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. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Nickel is also used in certain types of steel which lower magnetic properties. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. On Monday, a week after trading had been suspended, Xiang was close to securing a loan facility from JPMorgan Chase and other banks that would allow him to maintain his short position and could lead to the market reopening. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. Yet the firm's lucrative . They had offset their deals with Tsingshan by placing their own short positions on the LME. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. The product to deliver with LME nickel contracts is cathode nickel containing at least 99.8 percent nickel, in accordancewiththeAmerican Society for Testing and Materials' specifications. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Xiang didnt believe the rally would last. 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. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. 115 000 MT. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. 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. 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. Traded between $ 10,000 and $ 20,000 this website - Accessibility statement for... Short position, that was painful step in Glencore Plc was the dominant holder of nickel in recent,! Had offset their deals with Tsingshan by placing their own 4680 in recent,! 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