485,996 followers. 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. The production of Glencore Nikkelverk in 2019. The company had a further 120,000 tons or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase & Co. and Standard Chartered Plc. 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. 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. 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. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. 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. Just after 6 a.m., the price of nickel passed $100,000 a ton. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. 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. Chinese nickel heavyweight Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices suddenly exploded higher following Russia 's invasion of Ukraine, The Wall Street . Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. UNFORGIVABLE, tweeted Mark Thompson, a former trader at Trafigura and Apollo. 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. Glencore Nikkelverk is an important part of the green shift. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. The LME at the end of the day is a physical metal market, he says. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. Your email address will not be published. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. The LME made a near-unprecedented decision. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. For participants in commodities exchanges, a price rally is not necessarily good news. Hes in the physical nickel business. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. In turn, the extraction of precious metals by the company in 2021, i.e. 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. The metal is found in all our homes as a key ingredient of stainless steel. 92 132 MT. Why? At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. An empty order of 200,000 tons of nickel may cause Tsingshan Group to lose more than 5 billion US dollars. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. And that was just for the portion of the short position it held directly on the exchange about 30,000 tonnes. Short Interest; Premarket Screener . It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Xiang wanted to increase Tsingshans production dramatically by producing so-called nickel matte for electric vehicle batteries. Furious investors and traders. Still, contracts on the LME are backed by physical metal in a network of warehouses around the world, providing a direct link with the real-world metals industry. . Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Those past scandals forced reforms on the exchange. Our fundamental responsibility is market stability, he told Bloomberg TV. He draws a comparison with Silver Thursday, the day in 1980 when an attempt by the Hunt brothers to corner the silver market came unstuck. Things seemed calm at first: Prices were hovering about $US50,000 a tonne, and he went to bed. Project manager for transition of Sudbury INO from CAMP to Deswik. Then came a geopolitical crisis that caught him unawares. Our fundamental responsibility is market stability, he said. 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. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. The LMEs special committee held another call at about 6am. Long Term . Nickel Rim South Mine. Nickel is also used in certain types of steel which lower magnetic properties. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. Glencore is still a short opportunity but mid-2022 looks to be the end of long run commodity bear trend. Elon Musk wanted to buy 10-20% of Glencore, but refused to. (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. Beijing is supportive of him, Xiang told contacts recently. 2017 - 2018 Yicai Global, Yicai Media Group. Feb 2021 - Dec 202111 months. 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. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. Nickel boosts the energy within batteries and, at the same time, allows battery makers to reduce the use of more expensive cobalt. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. But much of Chinas academic and business community did not believe Russia would attack its neighbour. 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. China's manufacturing activity expanded at the fastest pace in more than a decade in February. 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. It is owned and operated by Glencore Canada Corporation.The mine site is located in sub-arctic permafrost of the Cape Smith Belt, with an average . , Mar 23, 2022. The price was frozen, below the record high but still at $80,000 a ton. 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. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trimtheir bets. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. It also highlights the risks of an opaque market where a handful of players play outsized roles, deciding how and where purchasers like global battery makers secure raw materials. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. The metal is found in all our homes as a key ingredient of stainless steel. 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. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. But the effects of the short squeeze are likely to be felt in other ways. Tsingshan accounted for about half that amount. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Tsingshans were even larger, numbering roughly $3 billion, according to a Bloomberg calculation based on the companys total short positionwhich, even after Xiang had closed out a portion of the bet in previous weeks, was over 150,000 tons. Sr. Exploration Geologist CMDIC Collahuasi 2006 - 2007 1 year. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. 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. While few observers believed Xiang could reach that level of production, he was confident. At 1 a.m. on Tuesday, the market opened. Some aggrieved traders are already preparing to take legal action against the exchange. 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. Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. But its obligations dwarfed its available cash and bank credit. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Raglan Mine is a nickel-copper operation located in the Arctic region at the extreme limit of northern Quebec. The penalty is part of the $1.5 billion Glencore agreed to pay to resolve bribery and market-manipulation probes in the US, UK and Brazil. 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. Xiang was aware of flaws in his strategy, people familiar with the matter said. Everything changed when Russia invaded Ukraine on February 24. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. While few observers believed Xiang could reach that level of production, he was confident. 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. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. (Podcast). And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. 6W - 9M. 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. Now, the traders watched with a mixture of horror and grim fascination as the price went skyward. Copper. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. It traded briefly above $100,000 a ton early on Tuesday. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. gold and silver, amounted to 809 and 31 516 tons, respectively. 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 . Short Term. LMEs Chamberlain defended cancelling the trades. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. Just after 6am, the price of nickel passed $US100,000 a tonne. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trim their bets. 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. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. 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. 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. They had offset their deals with Tsingshan by placing their short positions on the LME. Stainless steel with nickel content is omnipresent, for example in buildings, bridges and kitchen appliances. Glencore plc is a Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. . Sulphuric acid. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Those moves sent nickel to a record high of more than $US100,000 ($136,000) a tonne on Tuesday before trading was suspended. 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