Nickels price moved sharply higher in the week after Russias military invasion. 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. Nickel prices usually move a few hundred dollars per tonne in a day. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Coal Department. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. For a while, it wasunclear which view of the market would prevail. 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 . The fallout was immediate. 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. But much of Chinas academic and business community did not believe Russia would attack its neighbour. Just after 6 a.m., the price of nickel passed $100,000 a ton. Raglan Mine is a large nickel mining complex in the Nunavik region of northern Quebec, Canada.It is located approximately 100 kilometres (62 mi) south of Deception Bay. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered, in a bind. But while the short squeeze has weighed on Tsingshan's . We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. At 1am on March 8, the market opened. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. (Podcast). Tsingshans short position could have incurred mark-to-market losses of at least $US2 billion on Monday alone, people familiar with the matter said. 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. Nickel boosts the energy within batteries and, at the same time, allows battery makers to reduce the use of more expensive cobalt. The show will focus on global macro issues with a middle eastern context, provide expert analysis of major market moving stories and speak with the biggest newsmakers in the region. It traded briefly above $100,000 a ton early on Tuesday. The LME made a near-unprecedented decision. China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. 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. Several large brokers got margin calls of close to $1 billion each over the course of the day. Others took to social media. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. We have interests in a range of mining assets on four continents. Stainless steel with nickel content is omnipresent, for example in buildings, bridges and kitchen appliances. Nickel. . The LME made a near-unprecedented decision. The metal is found in all our homes as a key ingredient of stainless steel. 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. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Some think this could herald the end of the exchange itself. 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. Get in touch with us now. Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. 115 000 MT. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . What does Tsingshan Group's rival, Glencore, do? 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 . They had offset their deals with Tsingshan by placing their own short positions on the LME. Report summary. At current prices, nickel would comprise 12% of Glencore's EBITDA. The Nikkelverk Operations. . Just after 6am, the price of nickel passed $US100,000 a tonne. 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. spiked by as much as 250 per cent in little more than 24 hours. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. At 1 a.m. on Tuesday, the market opened. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. Xiangs short position has now racked upbillions of dollars in losses. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. Sep 2021 - Present1 year 5 months. The company has assured creditor banks in China that its . Effectively, it rewound the market to the moment when prices closed on Monday at $48,078. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. Your email address will not be published. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. 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. Xiang himself had little interest in international news, the people said, and the growing speculation over a possible war was hard to track in China. By now, the entire nickel industry was in crisis. Furious investors and traders. Hes in the physical nickel business. Live from Dubai, connecting Asian markets to the European opens. Baar, Zug, Switzerland. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. As Contract Writer / Coordinator, you will be part of the Contract Team, which is a team within the Coal Department. Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. If it can weather the current storm, Tsingshan which recorded more than $40 billion in annual revenue over the past two years should be a prime beneficiary of higher nickel prices as the worlds top producer. Its not just a casino.. Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. . And once again, this short squeeze racked up billions in losses for those involved. 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. Its also one of the most important raw materials needed in making batteries for electric vehicles. 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. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. 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. 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. 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. Now they had to pay big margin calls on the exchange while receiving no margin from their client. . Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. (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. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . Nickel prices usually move a few hundred dollars per ton in a day. Now they recognised that they had to suspend trading. The total volume mined by Glencore in 2021 fell compared to 2020, in part due to supply chain problems and the closure of some mines. 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. You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. In theory, there should be two options for this 200,000 tons of nickel short order: 1. Having capacity but no inventory puts Tsingshan at a disadvantage, he said. 389 8 Comments. 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 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. . Company says it puts it into the league of the largest undeveloped nickel deposits in the world. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. If you don't see the email, check your junk, spam or other folders. Once its industrial complex reaches peak p. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. For participants in commodities exchanges, a price rally is not necessarily good news. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. 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. An empty order of 200,000 tons of nickel may cause Tsingshan Group to lose more than 5 billion US dollars. Nickel prices, however, has been moving in an uptrend for a long time. I see all automakers within a short time creating their own 4680 . Related Article: Nickel price spike purely financial but Tsingshan effect could linger. While few observers believed Xiang could reach that level of production, he was confident. They had offset their deals with Tsingshan by placing their short positions on the LME. 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. Some aggrieved traders are already preparing to take legal action against the exchange. gold and silver, amounted to 809 and 31 516 tons, respectively. The nickel market was anything but calm. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. The product to deliver with LME nickel contracts is cathode nickel containing at least 99.8 percent nickel, in accordancewiththeAmerican Society for Testing and Materials' specifications. . Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. But its obligations dwarfed its available cash and bank credit. 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. 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. Still, contracts on the LME are backed by physical metal in a network of warehouses around the world, providing a direct link with the real-world metals industry. Back Submit. He was awakened by a phone call at 5:30 a.m. Ore is processed at the Strathcona mill. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. In theory, any price changes on the futures market should offset price changes in the value of the inventoriesas long as the traders canmeet their margin calls. 2W - 6W. Then, as now, a key factor was the intervention of the exchange. 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. Tsingshan accounted for about half that amount. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. Undeterred, the Chinese tycoon has told banks he wants to maintain his position, and has asked them to keep funding him despite the losses. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Tsingshan is an excellent Chinese enterprise.. Glencore Chief Executive Officer, Gary Nagle: "Overall production was mixed period-over-period (5 commodities up and 5 down in the table below), reflecting the Ernest Henry (copper/gold) and Bolivia (zinc) portfolio disposals, and geotechnical and processing challenges at Katanga, offset by improved cobalt, nickel and ferrochrome production levels and the . I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . 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 . Tsingshan mostlymakesstainless steelthat isused inthepetroleum, chemicals, auto,and other fields. 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 . Summary. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. Nickel Rim South Mine. While Russias nickel exports havent been targeted by sanctions, US and European buyers have nonetheless sought alternatives to Russian sources. The LME halted trading of the metal yesterday and announced that it is unable to deliver on spot nickel contracts scheduled for March 9. Trafigura Group sold cargoes of nickel it now believes may not have contained any of the metal to buyers including a US trade finance firm and a state-owned Jack Farchy on LinkedIn: Trafigura's Non-Existent Nickel Was Bought by a US Firm Xiang isnt just a financial trader making paper bets on price moves. 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. Nickel is also used in certain types of steel which lower magnetic properties. 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. Copper. Credit: INF News.com. Yet the firm's lucrative . When prices rose above $20,000 he would consider shorting nickel, the people said, because his production costs in Indonesia were as low as $10,000 a ton. Yet the day before, the market had started to unravel . Among them were some of the biggest names on Wall Street. Cash and short-term investments. Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. He started increasing his short position on the London Metal Exchange. Xiangs short position has now racked up billions of dollars in losses. For most of the past decade, theyd traded between $US10,000 ($13,700) and $US20,000. The difference is that nickel is a commodity that touches the entire global economy. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. 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. Complete Glencore PLC ADR stock information by Barron's. 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Produce 1.8 million tons a Team within the Coal Department tomorrow, Sunday, July 24 however, been! 4 years 2 months mark Hansen, chief executive officer of Concord Resources, using. Day before, the price of nickel production, including cobalt, copper, precious metals and platinum-group.! Incurred mark-to-market losses of at least $ US2 billion on Monday alone, people familiar that to!
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