Those moves sent nickel to a record high of more than $100,000 a ton on Tuesday beforetrading was suspended. Then, as now, a key factor was the intervention of the exchange. Were working to restore it. Now they had to pay big margin calls on the exchange while receiving no margin from their client. Nickel prices had been rising for weeks, amid fears that supplies from Russia the largest exporter of refined nickel would be disrupted if the country invaded Ukraine. Canada Nickel Company Inc. $1.24. The LME made a near-unprecedented decision. 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. He was awakened by a phone call at 5:30 a.m. Its not just a casino.. Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. Provided short/mid/long/strategic schedules using Deswik. 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. 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. Then came a geopolitical crisis that caught him unawares. 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. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee . Now they recognised that they had to suspend trading. Qingshan Holding Group,Nickel,Futures Contract, Paris Looms as Europe's Largest Financial Market, French Economy Minister Says, Alibaba, Spain's El Corte Ingles Department Store Ally on Digital Retail, China's GEM to Supply 100,000 Tons of Lithium Battery Materials to Korea's Ecopro, Toshiba Home Appliances Returns to Profit After Midea Takeover, Chairman Says, How AR is Poised to Change Business Forever. Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. Still, the LME has weathered numerous scandals before in its 145-year history, from a 1985 crisis in the tin market that caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than $US2 billion in losses. 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 mostlymakesstainless steelthat isused inthepetroleum, chemicals, auto,and other fields. Now they had to pay big margin calls on the exchange while receiving no margin from their client. 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. Glencore's original trading business is still a powerhouse and is . At current prices, nickel would comprise 12% of Glencore's earnings before interest, tax, depreciation and amortisation (EBITDA) as well as 9% EBITDA for Anglo American and BHP, also listed in Johannesburg. Perth, Western Australia, Australia. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Several large brokers got margin calls of close to $US1 billion each over the course of the day. This matters beyond the cozy world of . At 1am on March 8, the market opened. While few observers believed Xiang could reach that level of production, he was confident. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . 39 000 MT. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. Mar 16, 2022 - 8.00am. 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. Those past scandals forced reforms on the exchange. 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. Nickel Rim South Mine. Nickel is mainly used in the production of stainless steel because it improves its strength and resistance to corrosion. But its obligations dwarfed its available cash and bank credit. gold and silver, amounted to 809 and 31 516 tons, respectively. LMEs Chamberlain defended cancelling the trades. The so-called "hold short position" focuses on the word "hold" to hold the price higher, and the ultimate goal is to force Tsingshan Group's 200,000 tons of nickel to sell short positions, and there is no way to go. The fallout was immediate. (Yicai Global) March 9 --The chairman of Tsingshan Holding Group, the worlds second-largest nickel producer, said this weeks sky-rocketing prices of the metal have not impacted the Chinese firms operations or positions in the futures market. LME chief executive Matthew Chamberlain had stayed up to watch. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. The LME at the end of the day is a physical metal market, he says. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. For participants in commodities exchanges, a price rally is not necessarily good news. Why? But while the short squeeze has weighed on Tsingshan's . 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. In a squeeze, rising prices put traders betting on a drop in an ever-tougher financial position, forcing them or brokers and banks doing business on their behalf to buy the asset, a trade known as short covering that can drive prices even higher. Excellent coverage of an earth-shaking event. And once again, this short squeeze racked up billions in losses for those involved. The LMEs special committee held another call at about 6am. By now, the entire nickel industry was in crisis. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after this weeks unprecedented price spike, according to people familiar with the matter. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. 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. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Nickel prices usually move a few hundred dollars per tonne in a day. (" Mink " or the " Company ") today announced that the phase one diamond drill program is underway at its 40 . You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . He started increasing his short position on the London Metal Exchange. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. Then, as now, a key factor was the intervention of the exchange. The spike was driven in large part by a short squeeze centred on Chinese tycoon Xiang Guangda, who had amassed a big wager that nickel prices would fall through his company Tsingshan Holding Group. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. He said UBS . Glencore plc is a Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. 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. We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. By now, the entire nickel industry was in crisis. 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. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Glencore has a short interest ratio ("days to cover") of 0.2, which is generally considered an acceptable ratio of short interest to trading volume. Our fundamental responsibility is market stability, he told Bloomberg TV. 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From a contractual perspective, you may be . Glencore is a leading producer and marketer of nickel globally and Wayne has responsibility for the operation of mines and processing facilities in Australia, New Caledonia, Canada and Norway. 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. , Mar 23, 2022. The Chinese government may also play a role. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. 485,996 followers. Xiang Guangda, the billionaire owner of Tsingshan Holding Group. Sr. Exploration Geologist CMDIC Collahuasi 2006 - 2007 1 year. Because nickel resists high temperatures, it is used in special steel and superalloys intended for aircraft engines, among other applications. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Tsingshan accounted for about half that amount. LME brokers and their clients were hit with margin call after margin call. Please try again later. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. However, Xiang believed the risks to be manageable, the people said, even as anunidentified nickel stockpilercontrolled at least half of the inventories on the exchange. 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 new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . Nickel prices usually move a few hundred dollars per ton in a day. Xiang Guangda -- who controls the worlds largest nickel producer, Tsingshan Holding Group Co., and is known as Big Shot in Chinese commodity circles -- has closed out part of his companys short position and is considering whether to exit the wager altogether, the people said. 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. Hes in the physical nickel business. 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. 6 kt/a nickel in concentrate). Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Find the latest Glencore plc (GLNCY) stock quote, history, news and other vital information to help you with your stock trading and investing. 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. Yet the firm's lucrative . Report summary. Back Submit. 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. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. 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. Those 18 minutes will haunt me, says the executive, who requested anonymity. Cliff Asness, founder of AQR 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. The giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. You have achieved great things in these short 4 years (whilst remaining humble and kind . 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 . Beijing is supportive of him, Xiang told contacts recently. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. Your email address will not be published. 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. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. The Chinese government may also play a role. Then came a geopolitical crisis that caught him unawares. Mark Hansen, chief executive officer of Concord Resources. 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. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. During the fiscal year 2021, the Swiss-based company Glencore reported a nickel production of some 102.3 thousand metric tons. When it was flying towards $100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerageBands Financial Ltd.and a former LME board member. Nickel is a raw material that is characterized by exceptional resistance and special properties, thanks to which it has many applications. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Feb 2021 - Dec 202111 months. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. All prices are listed in Australian Dollars. At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Glencore Nikkelverk AS has a modern and complex processing system. But its obligations dwarfed its available cash and bank credit. Xstrata Nickel 4 years 1 month Directeur Operations Minieres et Services techniques . The company had a further 120,000 tonnes or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase and Standard Chartered. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. 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. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Your email address will not be published. Everything changed when Russia invaded Ukraine. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. Harjavalta nickel smelter in Finland (Credit: Boliden). One of the key Chinese players in last year's nickel short squeeze is preparing to meet London Metal Exchange Chief Executive Matthew Chamberlain in the first face-to-face encounter since the crisis that upended . . Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . Among them were some of the biggest names on Wall Street. Others in the market may also push up prices anticipating that short covering. 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 . Already at an all-time high by 5:42 a.m., it lurched higher in stomach-churning leaps, soaring $30,000 in a matter of minutes. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. 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. But the effects of the short squeeze are likely to be felt in other ways. It was 5.42 am on March 8 in London when the nickel market broke. Last modified on Wed 15 Feb 2023 06.23 EST. 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. Stephen Engle reports. Massive short positions held by Xiangs Tsingshan Holding Group, the worlds largest nickel producer, have gone disastrously awry over the past few days. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . 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. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. For most of the past decade, they'd traded between $10,000 and $20,000. . Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. They had offset their deals with Tsingshan by placing their short positions on the LME. We had a frenzy based on speculation that accelerated on Monday and Tuesday. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . Glencore Nickel. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. 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