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. 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. Source: LME. Our fundamental responsibility is market stability, he told Bloomberg TV. 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 . Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metal the type deliverable on the LME. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. 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. 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. Nickel prices usually move a few hundred dollars per tonne in a day. Copper. Others took to social media. (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. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. 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. 6W - 9M. Required fields are marked *. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. 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 . Coal Department. 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. 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. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. Senior Mine Engineer. . They had offset their deals with Tsingshan by placing their own short positions on the LME. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Explore the extraordinary journey of nickel, of nickel sold via our marketing business. 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He said UBS . Despite the recent upheaval, his company still remains the biggest in the nickel industry. 39 000 MT. Effectively, it rewound the market to the moment when prices closed on Monday at $48,078. Short Term. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered, in a bind. In theory, there should be two options for this 200,000 tons of nickel short order: 1. 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. 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. 4 354 . They include: Koniambo is a large-scale integrated ferronickel mining and processing complex. Multinational commodities company Glencore has temporarily reduced production at the Murrin Murrin nickel-cobalt operation in Western Australia following a malfunction at an acid plant at the site.. Glencore's Murrin Murrin fully integrated nickel and cobalt operation is located approximately 880km east of Perth in the north-eastern Goldfields region. 115 000 MT. Xstrata Nickel Montcalm Mine 2007 - 2010 3 years. 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. The metal is found in all our homes as a key ingredient of stainless steel. Nickel prices usually move a few hundred dollars per ton in a day. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. 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. Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. Everything changed when Russia invaded Ukraine on February 24. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. 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. 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. Xiang was aware of flaws in his strategy, people familiar with the matter said. Enter the code below to reset your password. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. Vale is the world's largest producer of nickel, one of the most versatile metals in existence. All prices are listed in Australian Dollars. The price move on March 8 created a systemic risk to the market, the LME said two days later. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . To date, the company has sold a tonne of nickel for an average of $ 18,474. 6 kt/a nickel in concentrate). Nickel prices, however, has been moving in an uptrend for a long time. 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. 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. 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. 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. 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. View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. Xiangs short position has now racked upbillions of dollars in losses. 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. While Russias nickel exports havent been targeted by sanctions, US and European buyers have nonetheless sought alternatives to Russian sources. 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. Some market rumors are circulating that Glencore might squeeze Tsingshan on LME Nickel for its 60% stake in a nickel mine in Indonesia. Nickel is mainly used in the production of stainless steel because it improves its strength and resistance to corrosion. . Why bet against nickel when you have a nickel business? Yet the day before, the market had started to unravel . 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 . The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Feb 2021 - Dec 202111 months. Tsingshan is in touch with relevant parties and has the support of Chinese government departments and leaders, he added. But the effects of the short squeeze are likely to be felt in other ways. Finance > Capital-markets. The production of Glencore Nikkelverk in 2019. Cash and short-term investments. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. Mark Hansen, chief executive officer of Concord Resources. Glencore Nikkelverk is an important part of the green shift. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. Related Article: Nickel price spike purely financial but Tsingshan effect could linger. . You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! He was awakened by a phone call at 5:30 a.m. LMEs Chamberlain defended cancelling the trades. Earlier this week, nickel prices in London spiked by as much as 250 per cent in little more than 24 hours. 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. Some aggrieved traders are already preparing to take legal action against the exchange. Glencore Nikkelverk AS has a modern and complex processing system. However, Xiang believed the risks to be manageable, the people said, even as an unidentified nickel stockpiler controlled at least half of the inventories on the exchange. Neither party seems very keen on this idea, however. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. (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. Traders and brokers on the open outcry pit at the London Metal Exchange. 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. 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 Mid Term. The fallout was immediate. That could either result in a huge loss for Tsingshan or the sale of a more than 60 percent stake in the companys Indonesian nickel mine and interest in its industrial park in the southeast Asian country, the report said. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. 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. 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. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. At 1am on March 8, the market opened. And once again, this short squeeze racked up billions in losses for those involved. 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. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. The wild rise of nickel drew comparisons to the short squeezes in meme stocks such as GameStop that gripped retail investors for much of last year. Xiang was aware of flaws in his strategy, people familiar with the matter said. Now they had to pay big margin calls on the exchange while receiving no margin from their client. The company had plans to produce 850,000 tonnes of nickel in 2022, an increase of 40 per cent in a year, says a person briefed on them. Glencore. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. 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