Xiang wanted to increase Tsingshans production dramatically by producing so-called nickel matte for electric vehicle batteries. Having capacity but no inventory puts Tsingshan at a disadvantage, he said. Others took to social media. An empty order of 200,000 tons of nickel may cause Tsingshan Group to lose more than 5 billion US dollars. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. To date, the company has sold a tonne of nickel for an average of $ 18,474. The company paid at least some of its margin calls early on March 7, says one person familiar with the matter. . 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. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. Its not just a casino. Some think this could herald the end of the exchange itself. Its unclear whether he will get his way. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Back Submit. 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, Chamberlain insisted on March 9 that the solvency of the LME itself was never in doubt. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. 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. 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. MINK. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. Xiang isnt just a financial trader making paper bets on price moves. The LME made a near-unprecedented decision. For the LME to cancel nickel trades between willing buyers and sellers is unforgivable. 20 kt/a nickel in concentrate) and Fraser Morgan (ca. Others in the market may also push up prices in anticipation of that short covering. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. The giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. 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. Yet the day before, the market had started to unravel . Our nickel operations are in Canada, Australia, Norway, and New Caledonia. ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. 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. The difference is that nickel is a commodity that touches the entire global economy. In turn, the extraction of precious metals by the company in 2021, i.e. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. . 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. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. 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. Xiang has told his banks and brokers that he still thinks the nickel price will fall and wants to keep his short position, Bloomberg reported on Thursday, citing people familiar with the matter. Explore the latest reports and results, including financial results, production reports and our annual report. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. The LME halted trading of the metal yesterday and announced that it is unable to deliver on spot nickel contracts scheduled for March 9. 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 . 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. Glencore Nickel. Nickel prices usually move a few hundred dollars per ton in a day. People forgot that this isnt a video game retailer; its an important physical commodity. But its obligations dwarfed its available cash and bank credit. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. 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 . Sulphuric acid. Complete Glencore PLC ADR stock information by Barron's. View real-time GLNCY stock price and news, along with industry-best analysis. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Just after 6 a.m., the price of nickel passed $100,000 a ton. 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. Raglan Mine is a nickel-copper operation located in the Arctic region at the extreme limit of northern Quebec. Follow the topics, people and companies that matter to you. 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 metal is found in all our homes as a key ingredient of stainless steel. (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.). At current prices, nickel would comprise 12% of Glencore's EBITDA. 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. 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. The LMEs history dates back to the early 19th century, when metal traders drew a circle in the sawdust on the floor of the Jerusalem Coffee House in the City of London. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. 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 discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. Live from Dubai, connecting Asian markets to the European opens. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. 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. The Nikkelverk Operations. 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. 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 . How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. 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. 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. Now, the traders watched with a mixture of horror and grim fascination as the price went skyward. The difference is that nickel is a commodity that touches the entire global economy. A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after this week's unprecedented price spike, according to people . From a contractual perspective, you may be . Cash and short-term investments. Chinese tycoon behind nickels big short has power to fuel more drama. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. Nickels price moved sharply higher in the week after Russias invasion. (via NewsDirect) Helix Resources Ltd (ASX:HLX) MD Mike Rosenstreich tells Proactive the company is ready to spin out its nickel and cobalt interests in the prolific Cobar Basin of NSW into a special-purpose vehicle aimed at maximising value for shareholders. Mid Term. It was 5.42 am on March 8 in London when the nickel market broke. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Not everyone shared his pessimism about prices. Xstrata Nickel Montcalm Mine 2007 - 2010 3 years. In the short term, apackage of loansfrom Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. 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. (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. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Nickel prices usually move a few hundred dollars per ton in a day. This matters beyond the cozy world of . People forgot that this isnt a video game retailer; its an important physical commodity.. The fallout was immediate. Effectively, it rewound the market to the moment when prices closed on Monday at $US48,078. It was 5:42 a.m. on March 8 in London when the nickel market broke. 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. 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. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. Nickels price moved sharply higher in the week after Russias military invasion. Then, as now, a key factor was the intervention of the exchange. 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. Hes in the physical nickel business. Furious investors and traders. The Chinese government may also play a role. He was awakened by a phone call at 5:30 a.m. 115 000 MT. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Shanghai's most-traded nickel futures contract . 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. But its obligations dwarfed its available cash and bank credit. It can produce 1.8 million tons of nickel alloy and its mine in Indonesia has an annual capacity of over 3.5 million tons. Cobalt. Harjavalta nickel smelter in Finland (Credit: Boliden). 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. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Just after 6am, the price of nickel passed $US100,000 a tonne. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. 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. Others took to social media. Perth, Western Australia, Australia. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. Tsingshan accounted for about half that amount. Tsingshan is an excellent Chinese enterprise.. Executives fromGoldman Sachs Group Inc.voiced their displeasure at the decision on a call with Chamberlain. The LME at the end of the day is a physical metal market, he says. 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. (Podcast). For Xiangs big short position, that was painful. Traders and brokers on the open outcry pit at the London Metal Exchange. 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. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. Xiang Guangda, the billionaire owner of Tsingshan Holding Group. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . For most of the past decade, theyd traded between $US10,000 ($13,700) and $US20,000. Were sorry, this feature is currently unavailable. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Company says it puts it into the league of the largest undeveloped nickel deposits in the world. The LME made a near-unprecedented decision. 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. Short Interest; Premarket Screener . Find the latest Glencore plc (GLNCY) stock quote, history, news and other vital information to help you with your stock trading and investing. Neither party seems very keen on this idea, however. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. 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. 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. Its not just a casino.. 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. But the effects of the short squeeze are likely to be felt in other ways. Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. 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