Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. Tsingshan Group is the partner of Huayou that develops the nickel project. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. Cliff Asness, founder ofAQR Capital Management,accused the LME, which was for more than a century owned by its members but in 2012 was sold to Hong Kong Exchanges & Clearing, of stealing money from market participants trading in good faith and giving it to Chinese nickel producers and their banks. LMEs Chamberlain defended canceling the trades. A Glencore spokesman declined to comment. This matters beyond the cozy world of . When it was flying towards $US100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerage Bands Financial and a former LME board member. By Lucy Battersby. Your email address will not be published. The metal is found in all our homes as a key ingredient of stainless steel. But its obligations dwarfed its available cash and bank credit. The nickel market was anything but calm. 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. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. Summary. Others took to social media. Earlier this week, nickel prices in London spiked by as much as 250 per cent in little more than 24 hours. 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 . It decided to cancel all the trades that took place on Tuesday morning some $US3.9 billion of them. But the effects of the short squeeze are likely to be felt in other ways. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. (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. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. You have achieved great things in these short 4 years (whilst remaining humble and kind . 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. Xiang didnt believe the rally would last. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Xiang isnt just a financial trader making paper bets on price moves. 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. Just after 6am, the price of nickel passed $US100,000 a tonne. 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. 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 discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. Login. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . Its also one of the most important raw materials needed in making batteries for electric vehicles. We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. articles a month for anyone to read, even non-subscribers! The LMEs special committee held another call at about 6am. 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. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. Production 2019. Nickel is a raw material that is characterized by exceptional resistance and special properties, thanks to which it has many applications. He was awakened by a phone call at 5.30am. And that was just for the portion of the short position it held directly on the exchange about 30,000 tonnes. Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. For most of the past decade, they'd traded between $10,000 and $20,000. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . 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 . How to Geta Free Flight to Hong Kong in 500,000 Airline Ticket Giveaway, Stocks Drop for a Second Day; Yields Stay Elevated: Markets Wrap, The SPAC Fad Is Ending in a Pile of Bankruptcies and Fire Sales, Apple Suppliers Are Racing to Exit China, AirPods Maker Says, China Warns Hedonistic Bankers to Toe the Communist Party Line. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. Neither party seems very keen on this idea, however. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. We produce some of the worlds purest nickel. In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. . Cliff Asness, founder of AQR Capital Management, accused the LME, which was for more than a century owned by its members but in 2012 was sold to Hong Kong Exchanges & Clearing, of stealing money from market participants trading in good faith and giving it to Chinese nickel producers and their banks. 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. The Chinese government may also play a role. 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. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Qingshan Holding Group,Nickel,Futures Contract, Paris Looms as Europe's Largest Financial Market, French Economy Minister Says, Alibaba, Spain's El Corte Ingles Department Store Ally on Digital Retail, China's GEM to Supply 100,000 Tons of Lithium Battery Materials to Korea's Ecopro, Toshiba Home Appliances Returns to Profit After Midea Takeover, Chairman Says, How AR is Poised to Change Business Forever. 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. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. Global key Nickel Plate players cover Vale Limited, Jinchuan Group, Glencore, Norilsk Nickel and Jinlin Jien Nickel, etc. 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. . Related Article: Nickel price spike purely financial but Tsingshan effect could linger. 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. Nickels price moved sharply higher in the week after Russias military invasion. Excellent coverage of an earth-shaking event. All prices are listed in Australian Dollars. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. . But today things have reversed, that is, Tsingshan Group has prepared 200,000 . The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. Strong passwords include numbers,letters,and special characters. Harjavalta nickel smelter in Finland (Credit: Boliden). Xiang isnt just a financial trader making paper bets on price moves. Nickels price moved sharply higher in the week after Russias invasion. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. Beijing is supportive of him, Xiang told contacts recently. The LME made a near-unprecedented decision. 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. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. Those past scandals forced reforms on the exchange. Activity . I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. Perth, Western Australia, Australia. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. . 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 $2 billion in losses. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Glencore Nickel. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. (Podcast). By now, the entire nickel industry was in crisis. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trim their bets. ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. Source: LME. Why bet against nickel when you have a nickel business? A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. 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. Market speculation has it that Tsingshan has a short position of about 200,000 tons of nickel, which it cannot deliver due to a lack of spot product after being assailed and squeezed out by US and European commodity futures giants such as Glencore, China Securities Journal reported yesterday. Get in touch with us now. Including positions on the London Metal Exchange and bilateral bets with banks, Xiang still has short holdings in the region of 150,000 tons, the people said. But much of Chinas academic and business community did not believe Russia would attack its neighbour. 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. Neither party seems very keen on this idea, however. 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. While few observers believed Xiang could reach that level of production, he was confident. Then on March 7, nickels price began its parabolic ascent, surging from $30,000 a ton to more than $50,000. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. 2023 Glacier Media Group, All Rights Reserved. To date, the company has sold a tonne of nickel for an average of $ 18,474. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. . Traders and brokers on the open outcry pit at the London Metal Exchange. 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. Credit: INF News.com. Short Interest; Premarket Screener . Tsingshan is an excellent Chinese enterprise.. . It traded briefly above $100,000 a ton early on Tuesday. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. In the short term, apackage of loansfrom Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. 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 new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . 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. Our fundamental responsibility is market stability, he told Bloomberg TV. Cobalt. 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. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Others in the market may also push up prices anticipating that short covering. Enter the code below to reset your password. 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. 92 000 MT. 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 . Then, as now, a key factor was the intervention of the exchange. Glencore-backed Leeuwin ready to set sail. 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. Glencore Nikkelverk AS has a modern and complex processing system. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. Among them were some of the biggest names on Wall Street. Nickel prices usually move a few hundred dollars per ton in a day. Its not just a casino.. In turn, the extraction of precious metals by the company in 2021, i.e. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. Glencore Nickel. The company has assured creditor banks in China that its . Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. Our nickel operations are in Canada, Australia, Norway, and New Caledonia. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Coal Department. Nickel prices, however, has been moving in an uptrend for a long time. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. 20 kt/a nickel in concentrate) and Fraser Morgan (ca. 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