He draws a comparison with Silver Thursday, the day in 1980 when an attempt by the Hunt brothers to corner the silver market came unstuck. Its not just a casino.. Excellent coverage of an earth-shaking event. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. Hes in the physical nickel business. At current prices, nickel would comprise 12% of Glencore's EBITDA. Tsingshan is an excellent Chinese enterprise.. Xiang Guangda, the billionaire owner of Tsingshan Holding Group. Others took to social media. 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 difference is that nickel is a commodity that touches the entire global economy. The operations also include the Sudbury smelter. Your password has been changed successfully. The Chinese government may also play a role. Summary. The company has assured creditor banks in China that its . I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. Even at that level, clients of LME brokers had failed to pay some $500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . Xiang was aware of flaws in his strategy, people familiar with the matter said. Follow the topics, people and companies that matter to you. Vale is the world's largest producer of nickel, one of the most versatile metals in existence. Traders and brokers on the open outcry pit at the London Metal Exchange. Sep 2021 - Present1 year 5 months. Among them were some of the biggest names on Wall Street. We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. Why bet against nickel when you have a nickel business? The wild rise of nickel drew comparisons to the short squeezes in meme stocks such as GameStop that gripped retail investors for much of last year. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . Worse, the chaos was spreading to other markets: Zinc prices spiked 15% in a few minutes to a record high, only to collapse again. Once its industrial complex reaches peak p. Nickel. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. The company had a further 120,000 tonnes or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase and Standard Chartered. Xiangs short position has now racked upbillions of dollars in losses. Were sorry, this feature is currently unavailable. Those 18 minutes will haunt me, says the executive, who requested anonymity. Others in the market may also push up prices in anticipation of that short covering. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. 5 000 MT. Neither party seems very keen on this idea, however. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. Tsingshan accounted for about half that amount. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. For a while, it was unclear which view of the market would prevail. Nickelcopper ores have been mined there since 1928. Located in Kristiansand, Nikkelverk is the largest nickel refinery in the western world producing high-quality nickel and cobalt. Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Earlier this week, nickel prices in London spiked byas much as 250%in little more than 24 hours. We produce some of the worlds purest nickel. Then came a geopolitical crisis that caught him unawares. 4 354 . ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. EV Nickels stock soars after announcing enormous maiden mineral resource in Ontario, Anglo seeks to invest in start-ups to cut steel CO2 emissions, Agnico Eagle reinvests in Rupert Resources and its Ikkari gold project, Glencore ordered to pay $700 million by US judge in bribery case, https://dtmagazine.com/money724-302022.php#wrap, 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. Its also one of the most important raw materials needed in making batteries for electric vehicles. 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. 92 132 MT. The exchange had serious concerns about the ability of market participants to meet their resulting margin calls, raising the significant risk of multiple defaults. Despite that, Chamberlain insisted on March 9 that the solvency of the LME itself was never in doubt. But its obligations dwarfed its available cash and bank credit. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Nickel rocketed to a record high above $100,000 a ton on Tuesday, driven in part by Tsingshan and its brokers activity, before trading was suspended. At 1am on March 8, the market opened. 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. Then, as now, a key factor was the intervention of the exchange. Find the latest Glencore plc (GLNCY) stock quote, history, news and other vital information to help you with your stock trading and investing. For participants in commodities exchanges, a price rally is not necessarily good news. Tsingshan mostlymakesstainless steelthat isused inthepetroleum, chemicals, auto,and other fields. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. Login. In theory, there should be two options for this 200,000 tons of nickel short order: 1. Tsingshan needs to increase the contract margins or roll over the futures if it decides to keep the contracts, which would require a huge amount of cash, an analyst told Yicai Global. Complete Glencore PLC ADR stock information by Barron's. View real-time GLNCY stock price and news, along with industry-best analysis. But its obligations dwarfed its available cash and bank credit. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. 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. The LME halted trading of the metal yesterday and announced that it is unable to deliver on spot nickel contracts scheduled for March 9. For the LME to cancel nickel trades between willing buyers and sellers is unforgivable. Glencore Nickel. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. 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. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. 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. From a contractual perspective, you may be . 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 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. Yet the day before, the market had started to unravel . 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 . 92 000 MT. 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. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. Beijing is supportive of him, Xiang told contacts recently. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. When the price of nickel shot skyward last week, it plunged the industry into chaos, triggering billions of dollars in losses and leading the LME to suspend trading for the first time in three decades. Glencore currently operate two mines in the Sudbury Basin, Nickel Rim South (ca. Their GLEN share price forecasts range from GBX 540 to GBX 740. Learn how we produce copper and the uses it is put to. Glencore's original trading business is still a powerhouse and is . Glencore plc was newly . LME chief executive Matthew Chamberlain had stayed up to watch. Vale - 208,000 metric tonnes. 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. Glencore Nickel. But the effects of the short squeeze are likely to be felt in other ways. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. gold and silver, amounted to 809 and 31 516 tons, respectively. 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. 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. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. 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 week's short squeeze is nonetheless likely to push . When it was flying towards $100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerageBands Financial Ltd.and a former LME board member. We have interests in a range of mining assets on four continents. 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. Then came a geopolitical crisis that caught him unawares. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. 1. 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. Glencore Nikkelverk AS has a modern and complex processing system. Related Article: Nickel price spike purely financial but Tsingshan effect could linger. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. 2W - 6W. Some aggrieved traders are already preparing to take legal action against the exchange. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. Mar 16, 2022 - 8.00am. Tsingshan is in touch with relevant parties and has the support of Chinese government departments and leaders, he added. Glencore is a leading producer and marketer of nickel globally and Wayne has responsibility for the operation of mines and processing facilities in Australia, New Caledonia, Canada and Norway. While few observers believed Xiang could reach that level of production, he was confident. Since 1910, nickel and other metals have been refined, produced and exported from the production plant in Kristiansand. 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. The head of one London metals brokerage recalls feeling sick as he watched the moves, realising what the spike in prices would mean for his company, the market, and the global metals industry. Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. 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. Your email address will not be published. The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. Nickels price moved sharply higher in the week after Russias military invasion. 20 kt/a nickel in concentrate) and Fraser Morgan (ca. In August 2021, Glencore increased its medium-term emission reduction target to a 50% reduction by 2035 on 2019 levels and introduced a new short-term target of a 15% reduction by 2026 on 2019 levels. 39 000 MT. China's manufacturing activity expanded at the fastest pace in more than a decade in February. 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. The exchange had serious concerns about the ability of market participants to meet their resulting margin calls, raising the significant risk of multiple defaults. Despite that, Chamberlaininsisted to Bloomberg TVon March 9 that the solvency of the LME itself was never in doubt. The Nikkelverk Operations. Its unclear whether he will get his way. Copper. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. Nickel. The fallout was immediate. It was 5.42 am on March 8 in London when the nickel market broke. Several large brokers got margin calls of close to $US1 billion each over the course of the day. For most of the past decade, theyd traded between $10,000 and $20,000. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. And cobalt metal trading of the short squeeze are likely to be felt other... 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