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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 . Others in the market may also push up prices anticipating that short covering. Shanghai's most-traded nickel futures contract . 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. But the effects of the short squeeze are likely to be felt in other ways. 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 . (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. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Short Interest; Premarket Screener . 6W - 9M. 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. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Glencore. 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. Copper. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. At the time of the LME's trading halt, nickel had gained more than 230% in March. Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. 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. Earlier this week, nickel prices in London spiked byas much as 250%in little more than 24 hours. Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. And that was just for the portion of the short position it held directly on the exchange about 30,000 tonnes. The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. 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. . The giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. We had a frenzy based on speculation that accelerated on Monday and Tuesday. They had offset their deals with Tsingshan by placing their own short positions on the LME. At 1am on March 8, the market opened. 115 000 MT. Others took to social media. 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. Our nickel operations are in Canada, Australia, Norway, and New Caledonia. MT. Nickelcopper ores have been mined there since 1928. Everything changed when Russia invaded Ukraine. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. Its not just a casino.. Most analysts sided with Xiang, at least in the medium term, believing that nickel production led by Tsingshan and its competitors in Indonesia would outpace demand. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Copper. 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. Raglan Mine is a nickel-copper operation located in the Arctic region at the extreme limit of northern Quebec. Production 2019. 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. Anyone using the LME needs to understand that. Supervised survey and mine scheduling groups. 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. 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. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. Your email address will not be published. Yet the day before, the market had started to unravel . Anyone using the LME needs to understand that. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. LMEs Chamberlain defended cancelling the trades. While few observers believed Xiang could reach that level of production, he was confident. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. On this day, however, metal traders across the city were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. 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. Report this profile Report Report. Our fundamental responsibility is market stability, he told Bloomberg TV. Share. The two major mining companies in Sudbury are working together to . 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. Our fundamental responsibility is market stability, he said. 2017 - 2018 Yicai Global, Yicai Media Group. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. Mid Term. Beijing is supportive of him, Xiang told contacts recently. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. 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. Ore is processed at the Strathcona mill. If you don't see the email, check your junk, spam or other folders. 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. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. 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. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. For Xiangs big short position, that was painful. Save my name, email, and website in this browser for the next time I comment. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. . Then came a geopolitical crisis that caught him unawares. 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. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. Yet the firm's lucrative . Sep 2021 - Present1 year 5 months. But its obligations dwarfed its available cash and bank credit. Source: LME. 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. Including positions on the London Metal Exchange and bilateral bets with banks, Xiang still has short holdings in the region of 150,000 tonnes, the people said. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. 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. Xiang isnt just a financial trader making paper bets on price moves. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Your password has been changed successfully. The LME at the end of the day is a physical metal market, he says. 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. 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. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. 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. I see all automakers within a short time creating their own 4680 . Effectively, it rewound the market to the moment when prices closed on Monday at $48,078. 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. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Nickels price moved sharply higher in the week after Russias military invasion. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . Vale and Glencore announced today that they've entered a partnership to begin a feasibility study to explore Nickel Rim South. But while the short squeeze has weighed on Tsingshan's . Your email address will not be published. Others in the market may also push up prices in anticipation of that short covering. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Glencore UK Ltd, Izimbiwa Coal (Pty) Ltd, Katanga Mining Limited, Kazzinc Ltd., Koniambo Nickel S.A.S., Magdeburg, Mangoola Coal Operations Pty Limited, McArthur River Mining Pty Ltd, Minera . 389 8 Comments. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. Nickel prices usually move a few hundred dollars per ton in a day. Our nickel operations are in Canada, Australia, Norway, and New . By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. For the LME to cancel nickel trades between willing buyers and sellers is unforgivable. 92 132 MT. 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. Nickel makes steel corrosion-resistant and plays an essential role in our modern world. 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. Earlier this week, nickel prices in London spiked by as much as 250 per cent in little more than 24 hours. LME chief executive Matthew Chamberlain had stayed up to watch. . Those past scandals forced reforms on the exchange. The Chinese government may also play a role. But much of Chinas academic and business community did not believeRussia would attackits neighbor. Now they had to pay big margin calls on the exchange while receiving no margin from their client. 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. Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. Neither party seems very keen on this idea, however. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. 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. Some aggrieved traders are already preparing to take legal action against the exchange. Were working to restore it. . Tsingshan accounted for about half that amount. 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. Mark Hansen, chief executive officer of Concord Resources. Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. Activity . At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee . But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. Nickel Rim South Mine. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. Sulphuric acid. articles a month for anyone to read, even non-subscribers! The company has assured creditor banks in China that its . . The difference is that nickel is a commodity that touches the entire global economy. Everything changed when Russia invaded Ukraine on February 24. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. 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 . Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. 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. 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. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. Baar, Switzerland 29 July 2022. Just after 6am, the price of nickel passed $US100,000 a tonne. Report summary. In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. Beijing is supportive of him, Xiang told contacts recently. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. Certain sections of this system have been patented. 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.. The world's top five nickel-producing companies. 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. 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. Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. By now, the entire nickel industry was in crisis. For most of the past decade, theyd traded between $US10,000 ($13,700) and $US20,000. Then, as now, a key factor was the intervention of the exchange. China's manufacturing activity expanded at the fastest pace in more than a decade in February. 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. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. The market may also push up prices in London spiked by as much as 250 per in... 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