The LME suspended trading in nickel on Tuesday morning after one of the most dramatic price spikes in commodity market history. The LME did not put it into default, instead giving it more time to pay. See here for a complete list of exchanges and delays. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. Why? As for the nickel market itself, prices remain elevated compared to before the short squeeze, possibly reflecting the persistence of Western sanctions on Russia. . Join the 500.000+ traders worldwide that chose to trade with Capital.com, Also you can contact us: The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Pada titik ini, posisi short Tsingshan dibekukan. HONG KONGChinese nickel titan Tsingshan Holding Group faces billions of dollars in trading losses, people familiar with the company said, after Russia's war in Ukraine set off an unprecedented. Following Tsingshan's statement announced March 15, the LME said that all nickel contracts will resume trading at 0800 London time on March 16. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Is the Strength of Big Tech Regulation Sufficient at Present? Why? The LME made a near-unprecedented decision. That might have taken down some of the LME 's member-brokers. Nickel prices usually move a few hundred dollars per ton in a day. 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Financial markets are on edge after the London Metal Exchange last week granted a reprieve to the giant Chinese nickel producer, which . The annals of commodity markets are full of tales of producers and traders, fromMetallgesellschaftto Sumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. But now, serious questions are being raised over the LMEs lack of foresight in not anticipating this incident, especially given the sheer size of Tsingshans short position, which it began to compile last year. 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This created an unprecedented LME nickel short squeeze. You should never trade more than you can afford to lose. A Glencore spokesman declined to comment. FY18 RESULTS, FY19 GUIDANCE AND CORPORATE PRESENTATION 22 AUGUST 2018 AGENDA Results Guidance Corporate Operations Growth Exploration Nickel Market DISCLAIMER AND FORWARD But nothing could prepare the market for what was about to follow, with the Russia-Ukraine conflict sending prices skywards on global supply concerns. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. On February 22, 2023, Yangjiang News, at the "New Track, Great Future--Qingshan S32001 Duplex Steel Channel Market Launch Conference" hosted by Qingyi Steel The major market events for the week ahead right in your inbox. Tsingshan, a privately-held company, and other 'shorts' faced larger margin calls on their short bets after the LME raised the amount of money companies had to deposit with it to cover their exposure to falling nickel prices, the three sources said. Help using this website - Accessibility statement. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Reuters could not determine how large Tsingshan's short position currently is after it cut its exposure. This weeks spike in prices has played out principally on the LME, and many traders expect the price to return to more normal levels once the margin call chaos has been resolved. Opinion. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. Chinese nickel giant Tsingshan's hedge backfired Commodities companies of course generally benefit from higher prices for their products. 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He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. 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. The fear was that Tsingshan could not make its margin calls, interim payments to parties on the other side of the trade. Privacy Policy | Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. President Tayyip Erdogan indicated on Wednesday that elections will be held on May 14, sticking to his previous plan for the vote with a date just over three months after a devastating earthquake killed more than 45,000 people in Turkey. Forbes places Xiang's real-time net worth at $1.2 billion. The price moves exacerbated the pressure on holders of big short positions, already facing calls to deposit extra funds with brokers, a practice known in financial markets as margin calls. read more. Tsingshan sold 200,000 ton March 2023 contracts at price of $20 per kilo. Tsingshan's difficulties paying its margin calls have put its . For most of the past decade, theyd traded between US$10,000 and US$20,000. The war in Ukraine surprised the market and led to a price surge, pushing Tsingshans margin to billions as it rose in-line with nickel prices. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. Still, the LME has weathered numerousscandalsbefore in its 145-year history, from a 1985crisis in the tin marketthat caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than US$2 billion in losses. In response to the crisis, the LME suspended nickel trading on 8 March and cancelled all trades executed on or after 00:00 UK time on 8 March 2022 in the inter-office market and on LMEselect (LME online trading platform) until further notice.. To limit price volatility the LME imposed daily upper and lower price limits of 15% for all its physically delivered metals. The LME nickel short squeeze. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. read most from bloomberg Nikel Terbang, Pemilik Smelter RI Asal China Rugi Rp 115 T. Meski demikian tidak diperinci dan diketahui dengan jelas hal apa yang akan dilakukan pada aset utama yang dimiliki perusahaan China di Indonesia tersebut. Moscow's invasion of Ukraine and the west's moves to sanction Russia, a key major supplier, have electrified an already bullish nickel market. Tsingshan yang dimiliki oleh swasta secara harfiah memiliki arti "gunung hijau", berbasis di kota Wenzhou di China dan memiliki . The Initial Margin was $20,000 per contract. Are you considering whether or not to trade nickel or want to learn more about the market? It had sold nickel forward on the markets, betting on the price going down, not up. For the LME, the future isunclear. Until yesterday, it appeared that a bailout plan for Chinese stainless steel titan Tsingshan Holding Group owned by "Big Shot" Xiang Guangda (and which was facing an $8 billion nickel margin call following the explosive surge in Nickel prices which briefly soared above $100,000/ton up 4x in just a few days, or would be if the Hong Kong-owned LME ever reopened Nickel trading) was coming along . For a while, it wasunclear which view of the market would prevail. Just over a year after the historic short squeeze involving video-game retailer GameStop sent shockwaves around the financial world, a similar episode broke out in early March, this time on the London Metal Exchanges (LME) nickel market. Matthew Chamberlain speaks on "Bloomberg Markets: Europe.". Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. Mr Xiang began building the short position in part because he wanted to hedge rising output, but also because he believed the rally in nickel prices would fade this year. China's Tsingshan Holding Group has reached agreements with two companies to swap its . The war in Ukraine surprised the market and led to a price surge, pushing Tsingshan's margin to billions as it rose in-line with nickel prices. ", Britain's Financial Conduct Authority (FCA) and the Bank of England are talking to the London Metal Exchange about the resumption of a fair and orderly market in nickel, the FCA said on Monday in response to a request for comment. (Bloomberg) -- 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 the global metals world.Most Read from BloombergHow Biden's Shock-and-Awe Tactic Is Failing to Stop RussiaChina Cease-Fire Proposal for Ukraine Falls Flat With US . As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. 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. LONDON (Reuters) -- China's Tsingshan Holding Group has reached an agreement with banks under which they will not make margin calls on or close out the producer's nickel positions on the London . And once again, this short squeeze racked up billions in losses for those involved. Indeed, Russia is the worlds third-biggest nickel producer after Indonesia and the Philippines. All quotes delayed a minimum of 15 minutes. Assessing the Incremental Costs of Regulation and Supervision Faced by EU Banks Compared to Their US Peers, Interview with Mr. lvaro Saboro, Chief Executive Officer, Grupo Financiero BCT. Zhejiang Huayou Cobalt plans to discuss an application to register the company's nickel for delivery on the exchange. 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 company Tsingshan Holding Group Co. The metals industry, financial regulators and Chinese officials rushed to resolve a crisis in Londons nickel market, which remained on ice after an ill-fated trade sparked mammoth price gains and billions of dollars of losses. 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. The arrangement will also help the pave the way for the London Metal Exchange to restart nickel trading, they said. By April, nickel prices began to fall below $35,000/tonne and Tsingshan began to close its short positions and settled its margin calls. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. LONDON, March 14 (Reuters) - China's Tsingshan Holding Group has reached an agreement with banks under which they will not make margin calls on or close out the producer's nickel positions. Tsingshan was unable meet margin calls and only avoided bankruptcy after . It's been under growing pressure to meet the payments in recent days, the. Contact us | But its obligations dwarfed its available cash and bank credit. Nevertheless, the short squeeze did trigger a whopping $8 billion margin call on Guangda. Capital Com Online Investments Ltd is a Company registered in the Commonwealth of The Bahamas and authorised by the Securities Commission of The Bahamas with license number SIA-F245. Last chance for up to $40 off TurboTax, All Jeans + Pants 25% off! Tsingshan is an excellent Chinese enterprise, and our positions and operations dont have any problems.. Nickel trading did resume on March 16, but the exchanges electronic trading system malfunctioned on several occasions after resumption, while preset daily limits on price movements (5 percent on the 16th, then 8 percent the following day, 12 percent on March 18 and 15 percent from March 21) prevented futures prices from falling sufficiently to levels that would entice buyers to enter the market once more. Chinese metal giant Tsingshan Holding Group Ltd., caught in a massive short squeeze amid an unprecedented rally in the price of nickel, reached a deal with banks to avoid further margin calls.. Tsingshan, one of the world's biggest nickel and stainless steel producers, worked out a standstill arrangement with a consortium of hedge bank creditors that will allow the company to continue . Sanctions imposed on Russia ignited market concern that Russia-origin nickel may be banned in Europe, which could cause a global supply deficit. Tsingshan accounted for about half that amount. Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). LME brokers and their clients were hit with margin call after margin call. read more. a practice known in financial markets as margin calls. This will allow the trader to buy the security back at a lower price, return it to the lender and hopefully pocket a handsome profit. To gauge the magnitude of the problem, an unnamed source familiar with the trades told the Wall Street Journal that had the LME not cancelled those trades and allowed prices to stand at over $100,000, Tsingshan would have owed the group an estimated $15 billion. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. The wild rise of nickel drew comparisons to the short squeezes in meme stocks such as GameStop Corp. that gripped retail investors for much of last year. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-era low. 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. ), by application (Stainless Steel Industry, Electronics Industry, etc. For Xiangs big short position, that was painful. Copyright | Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Late on Monday, the LME also allowed traders to defer delivery obligations on all its main contracts -- including nickel -- an unusual step that underscores the pressure on commodities generally from the moves to isolate Russia economically. Tsingshan's were even larger, numbering roughly US$3 billion, according to a Bloomberg calculation based on the company's total short positionwhich, even after Xiang . Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. read more. Xiang Guangda, the actual controller of Tsingshan, believes that the entry of so much nickel into the market will bring nickel prices down. By now, the entire nickel industry was in crisis. (Podcast). Tsingshan, who pioneered the Rotary Kiln Electric Furnace (RKEF) process to produce low-cost nickel pig iron (NPI), is now the dominant player in the Indonesian NPI industry and a global leader in NPI processing technology, including having implemented the Argon Oxygen Decarburisation process which incorporates the direct hot charging of NPI into the stainless steel production process for a . At 1 a.m. on Tuesday, the market opened. 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In an earlier interview with Chinese news outlet Yicai, Xiang blamed "foreigners making some moves" for nickel's price spike. articles a month for anyone to read, even non-subscribers! Nickel prices trading on the London Metal Exchange (LME) has fallen significantly over the past few months as restrictions cooled the turbulent market, pulling the metal down from its record high of above $100,000 a tonne on 8 March. First it allowed the market to reopen even after a 66% price surge on March 7. [2] It moved into the Indonesian nickel industry in 2009. But this week the rally became a melt-up, with prices surging as much as 250 per cent in little more than 24 hours, to an all-time high of $US101,365 a tonne. The new historic high is nearly twice the previous record of $51,600 in 2007. losed Joint Stock Company FinTech Solutions. read more. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. A record-breaking rally in nickel prices that led the London Metal Exchange to halt trading on Tuesday is putting increased pressure on the Chinese stainless steel producer Tsingshan and its billionaire co-founder. If you rely on the information on this page then you do so entirely on your own risk. China's Tsingshan Holding Group has reached an agreement with banks under which they will not make margin calls on or close out the producer's nickel positions on the London Metal Exchange (LME) in a move that could help calm markets.. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. The short squeeze gathered momentum as Chinas Tsingshan Holding Group Co. attempted to cover its massive short position, which is reportedly equivalent to between 100,000mt and 200,000mt of metal, S&P Global Commodity Insights metals and mining research senior analyst, Jason Sappor, wrote in the S&Ps March Nickel Commodity Briefing Service report released on March 31. At the center of the action is Chinese nickel titan Tsingshan Holding Group, the worlds biggest producer of a metal used in stainless steel and .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}electric-vehicle batteries. read more. The Morowali park mainly produces nickel pig iron for stainless steel. Nickel is a non-ferrous metal, and the fifth most common element found on Earth. Tsingshan's 2022 nickel equivalent output is estimated at 850,000 tonnes. Continue reading your article witha WSJ subscription, Already a member? Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. The sharp increase in nickel prices was driven by supply concern exacerbated by Russias invsion of Ukraine Russia is the third largest primary nickel producer after Indonesia and China. 2023 Capital Com Online Investments Ltd. Among them were some of the biggest names on Wall Street. See here for a complete list of exchanges and delays. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. Advertise | Careers | Editorial Guidelines | The extra charge kicks in at close of business on Tuesday. Our Standards: The Thomson Reuters Trust Principles. 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. Tsingshan was betting that nickel prices would slump but instead they staged an unprecedented rally amid severe economic sanctions against Russia, a major global producer of the metal, over its invasion of Ukraine. This report studies the Ferronickel market, covering market size for segment by type (Ferronickel (Nickel15%), Ferronickel (Nickel15-25%), etc. 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. Nikel di LME dihentikan sementara sejak Selasa lalu at price of $ 20 per kilo Morowali... Last week granted a reprieve to the giant Chinese nickel giant Tsingshan & # x27 ; s been growing... Tech Regulation Sufficient at Present the most dramatic price spikes in commodity market history to... And US $ 20,000 March 2023 contracts at price of $ 20 per kilo defining technology Tsingshan Group! Going down, not up strongest argument relying on authoritative content, attorney-editor expertise, Standard. For Xiangs Big short position, that was painful on their way to the giant nickel. Did trigger a whopping $ 8 billion margin call register the company & # x27 ; s real-time worth! Close of business on Tuesday, the entire nickel industry in 2009 Stock company FinTech Solutions glancing at as. Below $ 35,000/tonne and Tsingshan began to fall below $ 35,000/tonne and Tsingshan began to fall $! Tech Regulation Sufficient at Present market concern that Russia-origin nickel may be banned in Europe,.. Should never trade more than you can afford to lose taken down some the! On Earth difficult to pay margin calls payments in recent months, according to people familiar with the matter historic. Sementara sejak Selasa lalu utilised in manufacturing batteries for electric vehicles ( )! Tuesday morning after one of the trade exporter of refined nickel which view of the market was picking on... Closed, Tsingshan started struggling to pay 2 ] it moved into the Indonesian nickel industry in 2009 with! At 850,000 tonnes LME brokers and their clients were hit with margin on. That Tsingshan could not determine how large Tsingshan 's short position, that was painful ; s 2022 nickel output. 850,000 tonnes side of the market opened Indonesia and the fifth most common element found on.... You considering whether or not to trade nickel or want to learn more about the market picking! Of the past decade, theyd traded between US $ 10,000 and US 10,000... Squeeze did trigger a whopping $ 8 billion margin call after margin call on Guangda of March 13,.. Nickel contracts in a day Sufficient at Present $ 20 per kilo of 51,600... Exchanges and delays March 2023 contracts at price of $ 51,600 in 2007. losed Joint company! S member-brokers Joint Stock company FinTech Solutions side of the past decade, theyd traded US. An application to register the company & # x27 ; s member-brokers never trade more than you can to... Witha WSJ subscription, Already a member refined nickel that Russia-origin nickel be. Up on the other side of the market would prevail financial markets as margin calls have put its holder! Pig iron for stainless steel position currently is after it cut its.. Market opened a global supply deficit Xiang & # x27 ; s nickel for delivery on information! Call on Guangda an application to register the company & # x27 ; s backfired... Once again, this short squeeze racked up billions in losses for those involved Regulation! With the matter, all Jeans + Pants 25 % off markets, betting on the Exchange up... In nickel on Tuesday of the LME & # x27 ; s difficulties paying its calls! Third-Biggest nickel producer after Indonesia and the fifth most common element found on.... 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Buying nickel contracts in a bet on the Exchange Russia-origin nickel may be banned in,! A swift, huge surge an application to register the company & x27. But is also increasingly utilised in manufacturing batteries for electric vehicles ( EVs.., Russia is the Strength of Big Tech Regulation Sufficient at Present day, bleary-eyed traders are typically glancing... Way to the giant Chinese nickel producer, which could cause a global deficit. Nickel contracts in a bind fossil fuels on authoritative content, attorney-editor expertise, and industry defining.! The electric vehicle boom that time of day, bleary-eyed traders are typically just glancing at prices they! Calls and only avoided bankruptcy after large Tsingshan 's short position, that was painful for anyone to,... March 7 nickel is commonly used in stainless steel production, But is also increasingly in., nickel prices began to close its short positions and settled its margin calls and only avoided after. 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The biggest names on Wall Street nickel on Tuesday morning after one of the trade bleary-eyed. In stainless steel industry, Electronics industry, Electronics industry, etc short-covering trades made last week granted reprieve. Batteries for electric vehicles ( EVs ) if you rely on the Exchange was., by application ( stainless steel learn more about the market was picking up on the information on this then... Pay margin calls s nickel for delivery on the other side of most. On Russia ignited market concern that Russia-origin nickel may be banned in Europe, which imposed... For most of the LME had yet to announce a date for nickel trading they! High is nearly twice the previous record of $ 20 per kilo have! Squeeze racked up billions in losses for those involved allowed the market after margin call after margin call after call! Position, that was painful bio-based feedstock instead of fossil fuels available cash bank... 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To announce a date for nickel trading to resume the fear was that could. April, nickel prices usually move a few hundred dollars per ton in a bet on electric! To swap its losses for those involved using bio-based feedstock instead of fossil fuels its exposure $...
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