How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. 115 000 MT. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. A year after the short squeeze that brought the LME to the brink of collapse, the nickel market remains barely functional, with trading volumes sharply lower and prices regularly experiencing wild . In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. He started increasing his short position on the London Metal Exchange. (Podcast). 02 March 2023. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. The head of one London metals brokerage recalls feeling sick as he watched the moves, realizing what the spike in prices would mean for his company, the market, and the global metals industry. 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. 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. 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. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the 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. Resetting your password will log you out of all your active Yicai Global sessions. 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. Our nickel operations are in Canada, Australia, Norway, and New Caledonia. Copper. spiked by as much as 250 per cent in little more than 24 hours. 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. 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. 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. Your password has been changed successfully. Why bet against nickel when you have a nickel business? Having capacity but no inventory puts Tsingshan at a disadvantage, he said. 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. The price move on March 8 created a systemic risk to the market, the LME said two days later. 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. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. Just after 6am, the price of nickel passed $US100,000 a tonne. 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. 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. Effectively, it rewound the market to the moment when prices closed on Monday at $48,078. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Xiang isnt just a financial trader making paper bets on price moves. 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. 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. This type is different from the mainstream ferro-nickel and nickel pig iron. Nickel makes steel corrosion-resistant and plays an essential role in our modern world. 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. 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. 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. The LME canceled transactions and suspended trading Tuesday after nickel's price jumped 90% to $55,000 per metric ton Monday, and then leapt again to a record high of $100,000 the next day . A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Bloomberg Daybreak Middle East. The giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. Undeterred, the Chinese tycoon has told banks he wants to maintain his position, and has asked them to keep funding him despite the losses. A Glencore spokesman declined to comment. He started increasing his short position on the London Metal Exchange. Enter the code below to reset your password. Production 2019. The LME halted trading of the metal yesterday and announced that it is unable to deliver on spot nickel contracts scheduled for March 9. Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. Your email address will not be published. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Leeuwin managing director Chris Piggott was a senior geologist at ASX-listed Bellevue when it defined its core discoveries, and was part of the team that defined the greenfields Nova-Bollinger. The price was frozen, below the record high but still at $US80,000 a tonne. 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. As at January 31, 2023 Glencore holds 72,008,404 Common Shares, representing approximately 70.8% of the issued and outstanding Common Shares. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. Tsingshan Group is the partner of Huayou that develops the nickel project. (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. Executives fromGoldman Sachs Group Inc.voiced their displeasure at the decision on a call with Chamberlain. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. Nickels price moved sharply higher in the week after Russias invasion. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. The operations also include the Sudbury smelter. 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. You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! 21 962. But while the short squeeze has weighed on Tsingshan's . Shanghai's most-traded nickel futures contract . The price was frozen, below the record high but still at $80,000 a ton. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metal the type deliverable on the LME. Vale - 208,000 metric tonnes. The nickel market was anything but calm. Cobalt. 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 metal is found in all our homes as a key ingredient of stainless steel. 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. Short Interest; Premarket Screener . Xstrata Nickel 4 years 1 month Directeur Operations Minieres et Services techniques . It was 5.42 am on March 8 in London when the nickel market broke. 2023 Glacier Media Group, All Rights Reserved. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Nickel prices, however, has been moving in an uptrend for a long time. Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. At the time of the LME's trading halt, nickel had gained more than 230% in March. The difference is that nickel is a commodity that touches the entire global economy. Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. In theory, there should be two options for this 200,000 tons of nickel short order: 1. At current prices, nickel would comprise 12% of Glencore's EBITDA. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. 39 000 MT. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Glencore Nikkelverk is an important part of the green shift. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. By now, the entire nickel industry was in crisis. Nickel prices usually move a few hundred dollars per ton in a day. Our nickel operations are in Canada, Australia, Norway, and New . Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. And that was just for the portion of the short position it held directly on the exchange about 30,000 tonnes. Its not just a casino. The difference is that nickel is a commodity that touches the entire global economy. 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. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Now, the traders watched with a mixture of horror and grim fascination as the price went skyward. Matthew Chamberlain, the LMEs chief executive officer, had stayed up to watch. Baar, Switzerland 29 July 2022. They had offset their deals with Tsingshan by placing their short positions on the LME. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Soaring coal and metal prices powered Swiss mining and trading firm Glencore to a net income of $5 billion in 2021, a notable recovery from its $1.9 billion loss in 2020. China's manufacturing activity expanded at the fastest pace in more than a decade in February. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. Those 18 minutes will haunt me, says the executive, who requested anonymity. The two major mining companies in Sudbury are working together to . The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. LME chief executive Matthew Chamberlain had stayed up to watch. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. (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.). Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. 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. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. . Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. 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 Nickel. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered, in a bind. Stainless steel with nickel content is omnipresent, for example in buildings, bridges and kitchen appliances. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. We produce some of the worlds purest 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. Sep 2021 - Present1 year 5 months. 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. Tsingshans short position could have incurred mark-to-market losses of at least $US2 billion on Monday alone, people familiar with the matter said. 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 aggrieved traders are already preparing to take legal action against the exchange. Learn how we produce copper and the uses it is put to. 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. Others in the market may also push up prices anticipating that short covering. 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. Certain sections of this system have been patented. 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. The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. 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. 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. . Xiang was aware of flaws in his strategy, people familiar with the matter said. Mar 16, 2022 - 8.00am. Bloomberg. Sulphuric acid. 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. In this position, you will be responsible for the drafting of sales and purchase contracts and related legal documents. What does Tsingshan Group's rival, Glencore, do? 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. The production of Glencore Nikkelverk in 2019. Glencore plc was newly . 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