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. Poseidon Nickel is listed on the Australian Securities Exchange (ASX) and has a trailing 12-month revenue of around AUDC$256,000. 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. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. Nickel prices had been rising for weeks, amid fears that supplies from Russia the largest exporter of refined nickel would be disrupted if the countryinvaded Ukraine. 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. In turn, the extraction of precious metals by the company in 2021, i.e. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. Some think this could herald the end of the exchange itself. . Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. 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. 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. 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. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. Glencore has a short interest ratio ("days to cover") of 0.2, which is generally considered an acceptable ratio of short interest to trading volume. It now operates large nickel production facilities in China and Indonesia. The LME made a near-unprecedented decision. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. 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. On average, they predict the company's share price to reach GBX 620.91 in the next year. Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Nickel is mainly used in the production of stainless steel because it improves its strength and resistance to corrosion. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Late Tuesday . While few observers believed Xiang could reach that level of production, he was confident. Senior Mine Engineer. 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 . Resetting your password will log you out of all your active Yicai Global sessions. Copper. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. 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. . Ore is processed at the Strathcona mill. Stephen Engle reports. 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. this week's short squeeze is nonetheless likely to push . Explore the latest reports and results, including financial results, production reports and our annual report. Vale - 208,000 metric tonnes. For most of the past decade, theyd traded between $10,000 and $20,000. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. Bloomberg Daybreak Middle East. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. But the effects of the short squeeze are likely to be felt in other ways. Tsingshan Group is the partner of Huayou that develops the nickel project. Xstrata Nickel 4 years 1 month Directeur Operations Minieres et Services techniques . Like Comment Share. Production 2019. 3.28% . The fallout was immediate. 6W - 9M. 485,996 followers. LME brokers and their clients were hit with margin call after margin call. Baar, Switzerland 29 July 2022. Nickel prices had been rising for weeks, amid fears that supplies from Russia the largest exporter of refined nickel would be disrupted if the country invaded Ukraine. . 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 . Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. 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. Were working to restore it. . You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! But its obligations dwarfed its available cash and bank credit. 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. (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.). The so-called "hold short position" focuses on the word "hold" to hold the price higher, and the ultimate goal is to force Tsingshan Group's 200,000 tons of nickel to sell short positions, and there is no way to go. Some aggrieved traders are already preparing to take legal action against the exchange. But its obligations dwarfed its available cash and bank credit. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. Baar, Zug, Switzerland. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. For the LME, the future isunclear. 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. The price was frozen, below the record high but still at $US80,000 a tonne. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. 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. 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. Xiang isnt just a financial trader making paper bets on price moves. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. The difference is that nickel is a commodity that touches the entire global economy. China imported 3.44 million tonnes of NPI/ferro-nickel in 2020, up by 79.89% year on year, while Indonesia's material imports came to 2.73 million tonnes in 2020, up 99.6% from a year earlier, according to China Customs data. Xiang was aware of flaws in his strategy, people familiar with the matter said. For most of the past decade, they'd traded between $10,000 and $20,000. In this position, you will be responsible for the drafting of sales and purchase contracts and related legal documents. Nickels price moved sharply higher in the week after Russias military invasion. 5 000 MT. When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. Nickel. Yet the day before, the market had started to unravel . (Podcast). 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 . 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. UNFORGIVABLE, tweeted Mark Thompson, a former trader at Trafigura and Apollo. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . 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. 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. 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. But much of Chinas academic and business community did not believeRussia would attackits neighbor. Save my name, email, and website in this browser for the next time I comment. Located in Kristiansand, Nikkelverk is the largest nickel refinery in the western world producing high-quality nickel and cobalt. Elon Musk wanted to buy 10-20% of Glencore, but refused to. LME chief executive Matthew Chamberlain had stayed up to watch. Perth, Western Australia, Australia. Hes in the physical nickel business. To date, the company has sold a tonne of nickel for an average of $ 18,474. 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. 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. Furious investors and traders. Its also one of the most important raw materials needed in making batteries for electric vehicles. articles a month for anyone to read, even non-subscribers! Why? Stainless steel with nickel content is omnipresent, for example in buildings, bridges and kitchen appliances. 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. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. The LME halted trading of the metal yesterday and announced that it is unable to deliver on spot nickel contracts scheduled for March 9. It also highlights the risks of an opaque market where a handful of players play outsized roles, deciding how and where purchasers like global battery makers secure raw materials. 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. 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 . Not everyone shared his pessimism about prices. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. 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. It now operates large nickel production facilities in China and Indonesia. 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. By now, the entire nickel industry was in crisis. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. 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 . . Chinese tycoon behind nickels big short has power to fuel more drama. At 1am on March 8, the market opened. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. 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. 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. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metal the type deliverable on the LME. As at January 31, 2023 Glencore holds 72,008,404 Common Shares, representing approximately 70.8% of the issued and outstanding Common Shares. 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. , Mar 23, 2022. People forgot that this isnt a video game retailer; its an important physical commodity.. By Lucy Battersby. The company had plans to produce 850,000 tonnes of nickel in 2022, an increase of 40 per cent in a year, says a person briefed on them. What does Tsingshan Group's rival, Glencore, do? Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. Our fundamental responsibility is market stability, he said. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Strong passwords include numbers,letters,and special characters. 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. gold and silver, amounted to 809 and 31 516 tons, respectively. Get in touch with us now. At 1 a.m. on Tuesday, the market opened. Save my name, email, and website in this browser for the next time I comment. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. 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. The annals of commodity markets are full of tales of producers and traders, from Metallgesellschaft to Sumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. 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. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee . Our nickel operations are in Canada, Australia, Norway, and New Caledonia. 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. But while the short squeeze has weighed on Tsingshan's . Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. #GlencoreCopper #MetalOfTheFuture https://lnkd.in/eEqPmJn9. (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. Glencore Nickel. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. 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. Nickelcopper ores have been mined there since 1928. Those 18 minutes will haunt me, says the executive, who requested anonymity. While Russias nickel exports havent been targeted by sanctions, US and European buyers have nonetheless sought alternatives to Russian sources. 39 000 MT. LMEs Chamberlain defended cancelling the trades. Report this profile Report Report. 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. 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. Tsingshan is in touch with relevant parties and has the support of Chinese government departments and leaders, he added. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Xiang Guangda, the billionaire owner of Tsingshan Holding Group. 389 8 Comments. 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. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. Their GLEN share price forecasts range from GBX 540 to GBX 740. Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. Some aggrieved traders are already preparing to take legal action against the exchange. 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. 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. From a contractual perspective, you may be . Several large brokers got margin calls of close to $US1 billion each over the course of the day. Related Article: Nickel price spike purely financial but Tsingshan effect could linger. But while the short squeeze has weighed on Tsingshan's . Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . Why bet against nickel when you have a nickel business? The nickel market was anything but calm. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. Copper. Activity . They had offset their deals with Tsingshan by placing their own short positions on the LME. Among them were some of the biggest names on Wall Street. 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. Cash and short-term investments. The LMEs special committee held another call at about 6am. The LME made a near-unprecedented decision. 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. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. 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 skyward. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . At the time of the LME's trading halt, nickel had gained more than 230% in March. 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