He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. 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. 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. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. 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. Xiangs short position has now racked up billions of dollars in losses. LMEs Chamberlain defended cancelling the trades. Nickel boosts the energy within batteries and, at the same time, allows battery makers to reduce the use of more expensive cobalt. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. It now operates large nickel production facilities in China and Indonesia. The latest price was A$0.04 (25-minute delay). Harjavalta nickel smelter in Finland (Credit: Boliden). As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. Its unclear whether he will get his way. 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 Xiangs big short position, that was painful. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. People forgot that this isnt a video game retailer; its an important physical commodity.. We had a frenzy based on speculation that accelerated on Monday and Tuesday. On this day, however, metal traders across the city were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. 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. 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. 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 . Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. (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. 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. 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. 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. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Project manager for transition of Sudbury INO from CAMP to Deswik. Sulphuric acid. 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. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. The LME suspended nickel-market trading on Tuesday and the Shanghai Futures Exchangefollowed suita day later, after prices on Chinas top commodities bourse hit their daily upward limit. . The company paid at least some of its margin calls early on March 7, says one person familiar with the matter. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. (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. Nickel prices usually move a few hundred dollars per ton in a day. Undeterred, the Chinese tycoon has told banks he wants to maintain his position, and has asked them to keep funding him despite the losses. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. The metal is found in all our homes as a key ingredient of stainless steel. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. 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. The LME made a near-unprecedented decision. 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. Your email address will not be published. 115 000 MT. In theory, there should be two options for this 200,000 tons of nickel short order: 1. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. 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. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. 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. Because nickel resists high temperatures, it is used in special steel and superalloys intended for aircraft engines, among other applications. Sign up to get it every weekday morning. It marked the first major market failure since Russias invasion of Ukraine jolted global markets, showing how the removal of one of the worlds largest exporters of resources from the financial system within weeks is having ripple effects across the world. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. By now, the entire nickel industry was in crisis. Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. Inability to deliver the products was a big problem for Tsingshan, the analyst added, noting that the company has nickel iron, stainless steel, and nickel matte but noelectrolytic nickel, which is the type traded on the LME. On this day, however, metal traders were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. The LME made a near-unprecedented decision. Some market rumors are circulating that Glencore might squeeze Tsingshan on LME Nickel for its 60% stake in a nickel mine in Indonesia. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. Glencore plc was newly . 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. View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. 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. (Podcast). At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Neither party seems very keen on this idea, however. 02 March 2023. Our fundamental responsibility is market stability, he told Bloomberg TV. 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. 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. Others took to social media. In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. Find the latest Glencore plc (GLNCY) stock quote, history, news and other vital information to help you with your stock trading and investing. Tsingshan is an excellent Chinese enterprise.. Glencore Nickel. Tsingshan has recently threatened in Chinese domestic media to deliver physical metal to the LME, a strong-arm tactic that analysts say would push prices back down. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. 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. 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. Yet the firm's lucrative . From a contractual perspective, you may be . Evaporating liquidity. Worse, the chaos was spreading to other markets: Zinc prices spiked 15 per cent in a few minutes to a record high, only to collapse again. Chinese tycoon behind nickels big short has power to fuel more drama. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Matthew Chamberlain, the LMEs chief executive officer, had stayed up to watch. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. And once again, this short squeeze racked up billions in losses for those involved. Xiang isnt just a financial trader making paper bets on price moves. Those moves sent nickel to a record high of more than $100,000 a ton on Tuesday beforetrading was suspended. Worse, the chaos was spreading to other markets: Zinc prices spiked 15% in a few minutes to a record high, only to collapse again. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. Late Tuesday . 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 . Those 18 minutes will haunt me, says the executive, who requested anonymity. Then came a geopolitical crisis that caught him unawares. Its not just a casino. He started increasing his short position on the London Metal Exchange. 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. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . 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. 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. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . Were working to restore it. Nickel is also used in certain types of steel which lower magnetic properties. Traders and brokers on the open outcry pit at the London Metal Exchange. 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. The fallout was immediate. 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. 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. Senior Mine Engineer. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Then, as now, a key factor was the intervention of the exchange. Stephen Engle reports. As at January 31, 2023 Glencore holds 72,008,404 Common Shares, representing approximately 70.8% of the issued and outstanding Common Shares. Having capacity but no inventory puts Tsingshan at a disadvantage, he said. Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. (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.). Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. 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 . ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. An all-time high by 5:42 a.m., it is used in certain types of steel which lower magnetic.. Making some moves for nickels price spike in an interview with Chinese outlet! 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