Short Term. (Podcast). Not everyone shared his pessimism about prices. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. 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. Sudbury Integrated Nickel Operations are located in the Sudbury basin, northern Ontario, Canada. 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. For a while, it was unclear which view of the market would prevail. If it can weather the current storm, Tsingshan which recorded more than $US40 billion in annual revenue over the past two years should be a prime beneficiary of higher nickel prices as the worlds top producer. 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. It was 5.42 am on March 8 in London when the nickel market broke. Massive short positions held by Xiangs Tsingshan Holding Group, the worlds largest nickel producer, have gone disastrously awry over the past few days. 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. 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. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. A Glencore spokesman declined to comment. . Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. 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. View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Its not just a casino. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. 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. . 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. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. 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. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Si estn subiendo los predios de los metales y dedcuieto nuevas forulasparavas frmulas paraformar y tranformar los metales megustaria encontrar una empresa ,organizacin,para si le interereza ase un tratado denegosiar un trato demostraciones y prbarles yensearleslo que estudie transformaciones aliaciones dijitales y la fabricacionde. A market that many veterans simply describe as "broken." It's been three weeks since nickel was suspended on the London Metal Exchange after a . Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. 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. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. #GlencoreCopper #MetalOfTheFuture https://lnkd.in/eEqPmJn9. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. And once again, this short squeeze racked up billions in losses for those involved. Resetting your password will log you out of all your active Yicai Global sessions. Credit: INF News.com. 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 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. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. Nickel prices usually move a few hundred dollars per ton in a day. 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. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. All prices are listed in Australian Dollars. Some think this could herald the end of the exchange itself. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. 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. Remember, when prices move up, traders such as Xiang who have sold futures contracts face margin calls; they must put up more cash to cover potential losses. 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. People forgot that this isnt a video game retailer; its an important physical commodity.. 6 kt/a nickel in concentrate). (This account of events in the nickel market is based on dozens of interviews with people involved, many of whom requested anonymity because the matters are private.). Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. 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. Not everyone shared his pessimism about prices. . Then, as now, a key factor was the intervention of the exchange. Nickel is mainly used in the production of stainless steel because it improves its strength and resistance to corrosion. 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 while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. Long Term . 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. Neither party seems very keen on this idea, however. The LME made a near-unprecedented decision. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. Vale - 208,000 metric tonnes. Just after 6am, the price of nickel passed $US100,000 a tonne. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. 389 8 Comments. But its obligations dwarfed its available cash and bank credit. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. 2023 Glacier Media Group, All Rights Reserved. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. The investment is part of Ruperts non-brokered private placement for gross proceeds of about $35 million. Feb 2021 - Dec 202111 months. 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. 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. 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. Login. Your password has been changed successfully. Sign up to get it every weekday morning. 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It decided to cancel all the trades that took place on Tuesday morning some $US3.9 billion of them. Others took to social media. Glencore-backed Leeuwin ready to set sail. Cobalt. Those past scandals forced reforms on the exchange. We produce some of the worlds purest nickel. The metal is found in all our homes as a key ingredient of stainless steel. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. But its obligations dwarfed its available cash and bank credit. . By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. 5 000 MT. Your email address will not be published. They include: Koniambo is a large-scale integrated ferronickel mining and processing complex. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. The company had plans to produce 850,000 tons of nickel in 2022, an increase of 40% in a year, according to a person briefed on them. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. . ESC Mali school of busness. 6W - 9M. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. Sep 2021 - Present1 year 5 months. Others in the market may also push up prices in anticipation of that short covering. Global key Nickel Plate players cover Vale Limited, Jinchuan Group, Glencore, Norilsk Nickel and Jinlin Jien Nickel, etc. Enter the code below to reset your password. In the short term, apackage of loansfrom Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Sr. Exploration Geologist CMDIC Collahuasi 2006 - 2007 1 year. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Tsingshan Group placed a short nickel order, and the matter of being shorted by the opponent was brushed off. Required fields are marked *. LME chief executive Matthew Chamberlain had stayed up to watch. 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. Some aggrieved traders are already preparing to take legal action against the exchange. Neither party seems very keen on this idea, however. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. 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. MINK. The Nikkelverk Operations. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. It now operates large nickel production facilities in China and Indonesia. Now, the traders watched with a mixture of horror and grim fascination as the price went skyward. 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. The difference is that nickel is a commodity that touches the entire global economy. Stainless steel with nickel content is omnipresent, for example in buildings, bridges and kitchen appliances. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. The production of Glencore Nikkelverk in 2019. Evaporating liquidity. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. UNFORGIVABLE, tweeted Mark Thompson, a former trader at Trafigura and Apollo. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, CEO of trading house Concord Resources. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metal the type deliverable on the LME. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. 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. 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. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. Finance > Capital-markets. Glencore plc is a Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . 485,996 followers. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. Save my name, email, and website in this browser for the next time I comment. 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. 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. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. Nickel is a raw material that is characterized by exceptional resistance and special properties, thanks to which it has many applications. By now, the entire nickel industry was in crisis. While few observers believed Xiang could reach that level of production, he was confident. People forgot that this isnt a video game retailer; its an important physical commodity. 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 . Ore is processed at the Strathcona mill. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. Why bet against nickel when you have a nickel business? Poseidon Nickel is listed on the Australian Securities Exchange (ASX) and has a trailing 12-month revenue of around AUDC$256,000. 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. 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 exchangeunder review. Elon Musk wanted to buy 10-20% of Glencore, but refused to. Hes in the physical nickel business. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Worse, the chaos was spreading to other markets: Zinc prices spiked 15% in a few minutes to a record high, only to collapse again. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. 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. Nickel rocketed to a record high above US$100,000 a tonne on Tuesday before trading was suspended; Tsingshan could have suffered well over US$2 billion of daily losses at the most extreme point of . For most of the past decade, theyd traded between $10,000 and $20,000. Xiang was aware of flaws in his strategy, people familiar with the matter said. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. But while the short squeeze has weighed on Tsingshan's . Cash and short-term investments. 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. 1w. Bloomberg. Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. The price was frozen, below the record high but still at $US80,000 a tonne. Xiang Guangda, the billionaire owner of Tsingshan Holding Group. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered, in a bind. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. Report this profile Report Report. 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 . Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. 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. The fallout was immediate. He said UBS . Their GLEN share price forecasts range from GBX 540 to GBX 740. Those moves sent nickel to a record high of more than $100,000 a ton on Tuesday beforetrading was suspended. 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. 39 000 MT. Then came a geopolitical crisis that caught him unawares. Xiang wanted to increase Tsingshans production dramatically by producing so-called nickel matte for electric vehicle batteries. Just after 6 a.m., the price of nickel passed $100,000 a ton. Baar, Switzerland 29 July 2022. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. 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. Rio Tinto, the world's second-largest mining company by market capitalization, last week said it would lift annual capital investment to as much as $10 billion in 2024 and 2025, up around 25% on . The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. 2W - 6W. Formerly called Companhia Vale do Rio Doce, Vale is a diversified multinational metals and mining company founded in 1942, and headquartered in Rio de Janeiro, Brazil. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Its not just a casino.. A Glencore spokesman declined to comment. Xiangs short position has now racked upbillions of dollars in losses. At 1am on March 8, the market opened. Sulphuric acid. Perth, Western Australia, Australia. Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. The world's top five nickel-producing companies. 20 kt/a nickel in concentrate) and Fraser Morgan (ca. Xstrata Nickel Montcalm Mine 2007 - 2010 3 years. This suggests a possible upside of 27.1% from the stock's current price. LME brokers and their clients were hit with margin call after margin call. But today things have reversed, that is, Tsingshan Group has prepared 200,000 . The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . 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. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. Glencore's disclosure follows a forecast earlier this month that there needs to be greater investment in nickel production, even though the short-term picture suggests there will be a glut of the metal. Copper. Yet the day before, the market had started to unravel . Beijing is supportive of him, Xiang told contacts recently. 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