The metal is found in all our homes as a key ingredient of stainless steel. Nickel prices doubled on Tuesday and briefly rose above a record $100,000 a tonne as banks and brokers rushed to close part of a huge position amassed by Xiang Guangda, the billionaire founder of . At 1 a.m. on Tuesday, the market opened. It traded briefly above $100,000 a ton early on Tuesday. Back Submit. 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. 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 . 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 . 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. The company has assured creditor banks in China that its . 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. 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. Senior Mine Engineer. 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 . At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. If you don't see the email, check your junk, spam or other folders. 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. 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. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. He started increasing his short position on the London Metal Exchange. 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. 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. Sr. Exploration Geologist CMDIC Collahuasi 2006 - 2007 1 year. 485,996 followers. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. Nickel prices surged to an all-time high on Tuesday, up roughly 250% in just two days, and forcing the London Metal Exchange to close trading. As Contract Writer / Coordinator, you will be part of the Contract Team, which is a team within the Coal Department. LME brokers and their clients were hit with margin call after margin call. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. Perhaps what's most surprising is that this nickel squeeze happened within a market that had, for the last few years, been comparatively sedate, with rangebound trading rarely breaking above the $20,000/metric tonne (mt) mark on the upside before 2022. They include: Koniambo is a large-scale integrated ferronickel mining and processing complex. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Share. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Short Interest; Premarket Screener . Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. Vale is the world's largest producer of nickel, one of the most versatile metals in existence. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. 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. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. Some aggrieved traders are already preparing to take legal action against the exchange. 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. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. At the time of the LME's trading halt, nickel had gained more than 230% in March. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. At current prices, nickel would comprise 12% of Glencore's EBITDA. Xiang wanted to increase Tsingshans production dramatically by producing so-called nickel matte for electric vehicle batteries. 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 giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. 39 000 MT. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Short Term. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. The price move on March 8 created a systemic risk to the market, the LME said two days later. this week's short squeeze is nonetheless likely to push . 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. Once its industrial complex reaches peak p. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. Tsingshan Group is the partner of Huayou that develops the nickel project. Nickels 250% 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 theLondon Metal Exchangeto suspend trading for the first time in three decades. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. 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. Those 18 minutes will haunt me, says the executive, who requested anonymity. 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. articles a month for anyone to read, even non-subscribers! Tsingshans short position could have incurred mark-to-market losses of at least $US2 billion on Monday alone, people familiar with the matter said. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. 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. MT. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. Your email address will not be published. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. 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. Others took to social media. 92 000 MT. For the LME to cancel nickel trades between willing buyers and sellers is unforgivable. 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. The nickel market was anything but calm. 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. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. The Murrin Murrin Mine is a major nickel-cobalt mining operation being conducted in the North Eastern Goldfields, approximately 45 km east of Leonora, Western Australia.The project was initiated as a joint venture between Murrin Murrin Holdings Pty Ltd, a wholly owned subsidiary of Anaconda Nickel Limited (whose share was 60%) and Glenmurrin Pty Ltd, a wholly owned subsidiary of Glencore . The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. 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. The Chinese government may also play a role. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. . In theory, there should be two options for this 200,000 tons of nickel short order: 1. , Mar 23, 2022. . Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. While few observers believed Xiang could reach that level of production, he was confident. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trim their bets. Late Tuesday . Our nickel operations are in Canada, Australia, Norway, and New Caledonia. Our nickel operations are in Canada, Australia, Norway, and New . In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Production 2019. Sulphuric acid. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. The LME at the end of the day is a physical metal market, he says. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. 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 companyTsingshan Holding Group Co.On Monday, a week after trading had been suspended, Xiang wasclose to securing a loan facilityfrom JPMorgan Chase & Co. and other banks that would allow him to maintain his short position and could lead to the market reopening. The metal is found in all our homes as a key ingredient of stainless steel. Mar 16, 2022 - 8.00am. Nickel prices usually move a few hundred dollars per ton in a day. 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. Since 1910, nickel and other metals have been refined, produced and exported from the production plant in Kristiansand. It decided to cancel all the trades that took place on Tuesday morning some $US3.9 billion of them. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. Your email address will not be published. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. The spike was driven in large part by a short squeeze centred on Chinese tycoon Xiang Guangda, who had amassed a big wager that nickel prices would fall through his company Tsingshan Holding Group. 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. 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. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. Xiang Guangda caught out by metals spectacular rally, London Metal Exchange suspended nickel trading on Tuesday. Tsingshan accounted for about half that amount. For participants in commodities exchanges, a price rally is not necessarily good news. 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. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. The investment is part of Ruperts non-brokered private placement for gross proceeds of about $35 million. gold and silver, amounted to 809 and 31 516 tons, respectively. In theory, any price changes on the futures market should offset price changes in the value of the inventories as long as the traders can meet their margin calls. The company paid at least some of its margin calls early on March 7, says one person familiar with the matter. Cobalt. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trimtheir bets. 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. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . spiked by as much as 250 per cent in little more than 24 hours. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. To date, the company has sold a tonne of nickel for an average of $ 18,474. Cobalt. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. People forgot that this isnt a video game retailer; its an important physical commodity. 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 . He went on to pioneer new methods for producing nickel and stainless steel that upended the markets and made his Tsingshan the worlds largest producer of both. Nickelcopper ores have been mined there since 1928. Follow the topics, people and companies that matter to you. People forgot that this isnt a video game retailer; its an important physical commodity.. 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 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. Required fields are marked *. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. However, Xiang believed the risks to be manageable, the people said, even as an unidentified nickel stockpiler controlled at least half of the inventories on the exchange. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. 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. Our fundamental responsibility is market stability, he said. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Golf's Greatest Holes: Golfing legend Paul McGinley takes television presenter Chris Hollins on a tour of the best golf courses in Ireland and Northern Ireland. 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 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 . Were sorry, this feature is currently unavailable. The paper loss stood at $8 billion on Monday, before violent moves in nickel prices led the London Metal Exchange to suspend trading in the metal on Tuesday, one of the people said. Bloomberg Daybreak Middle East. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . Nickel makes steel corrosion-resistant and plays an essential role in our modern world. 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. 389 8 Comments. Nickel is also used in certain types of steel which lower magnetic properties. The operations also include the Sudbury smelter. 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. . Feb 2021 - Dec 202111 months. Nickel prices usually move a few hundred dollars per tonne in a day. Its also one of the most important raw materials needed in making batteries for electric vehicles. 6 kt/a nickel in concentrate). The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. Baar, Switzerland 29 July 2022. It was 5:42 a.m. on March 8 in London when the nickel market broke. Excellent coverage of an earth-shaking event. Hes in the physical nickel business. Report this profile Report Report. China's manufacturing activity expanded at the fastest pace in more than a decade in February. However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . We produce some of the worlds purest nickel. Glencore plc was newly . Glencore is still a short opportunity but mid-2022 looks to be the end of long run commodity bear trend. Why bet against nickel when you have a nickel business? But much of Chinas academic and business community did not believeRussia would attackits neighbor. By now, the entire nickel industry was in crisis. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, CEO of trading house Concord Resources. 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. The LME made a near-unprecedented decision. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. 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. Now they had to pay big margin calls on the exchange while receiving no margin from their client. Neither party seems very keen on this idea, however. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. 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. Ore is processed at the Strathcona mill. What does Tsingshan Group's rival, Glencore, do? ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. 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. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. Glencore Headquarters. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. 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. Then came a geopolitical crisis that caught him unawares. Everything changed when Russia invaded Ukraine. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. 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. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Others took to social media. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. 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 . Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. 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. This suggests a possible upside of 27.1% from the stock's current price. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. Activity . Among them were some of the biggest names on Wall Street. A Glencore spokesman declined to comment. For Xiangs big short position, that was painful. You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! Many producers, traders, and users of nickel with short positions on the LME were facing margin calls many times larger than they were prepared for. 6W - 9M. 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. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. (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. I see all automakers within a short time creating their own 4680 . 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. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to 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. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. A Glencore spokesman declined to comment. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. 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