By now, the entire nickel industry was in crisis. 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. 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. Credit: INF News.com. 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. For participants in commodities exchanges, a price rally is not necessarily good news. A Glencore spokesman declined to comment. The world's top five nickel-producing companies. 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. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. Glencore Nikkelverk AS has a modern and complex processing system. Excellent coverage of an earth-shaking event. Tsingshan accounted for about half that amount. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. Nickel Rim South Mine. Glencore Nickel. 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. 389 8 Comments. 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. The difference is that nickel is a commodity that touches the entire global economy. Baar, Zug, Switzerland. Copper. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. Raglan Mine is a nickel-copper operation located in the Arctic region at the extreme limit of northern Quebec. Others took to social media. 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 . While few observers believed Xiang could reach that level of production, he was confident. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. . When prices rose above $20,000 he would consider shorting nickel, the people said, because his production costs in Indonesia were as low as $10,000 a ton. Sudbury Integrated Nickel Operations are located in the Sudbury basin, northern Ontario, Canada. The metal is found in all our homes as a key ingredient of stainless steel. 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. Get in touch with us now. Furious investors and traders. Tsingshan Group is the partner of Huayou that develops the nickel project. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Multinational commodities company Glencore has temporarily reduced production at the Murrin Murrin nickel-cobalt operation in Western Australia following a malfunction at an acid plant at the site.. Glencore's Murrin Murrin fully integrated nickel and cobalt operation is located approximately 880km east of Perth in the north-eastern Goldfields region. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. At 1 a.m. on Tuesday, the market opened. China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. Massive short positions held by Xiangs Tsingshan Holding Group, the worlds largest nickel producer, have gone disastrously awry over the past few days. 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 . It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Glencore plc was newly . 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 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. Tsingshan mostlymakesstainless steelthat isused inthepetroleum, chemicals, auto,and other fields. Back Submit. 2017 - 2018 Yicai Global, Yicai Media Group. Not everyone shared his pessimism about prices. Nickel. Ore is processed at the Strathcona mill. For most of the past decade, they'd traded between $10,000 and $20,000. 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. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. While few observers believed Xiang could reach that level of production, he was confident. Certain sections of this system have been patented. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. 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. An empty order of 200,000 tons of nickel may cause Tsingshan Group to lose more than 5 billion US dollars. Complete Glencore PLC ADR stock information by Barron's. View real-time GLNCY stock price and news, along with industry-best analysis. articles a month for anyone to read, even non-subscribers! 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 . Enter the code below to reset your password. He started increasing his short position on the London Metal Exchange. Cobalt. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. . Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. The company had a further 120,000 tons or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase & Co. and Standard Chartered Plc. But the effects of the short squeeze are likely to be felt in other ways. For most of the past decade, theyd traded between $10,000 and $20,000. It was 5.42 am on March 8 in London when the nickel market broke. At the time of the LME's trading halt, nickel had gained more than 230% in March. Anyone using the LME needs to understand that. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. 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. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. Several large brokers got margin calls of close to $1 billion each over the course of the day. 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. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. Executives fromGoldman Sachs Group Inc.voiced their displeasure at the decision on a call with Chamberlain. It traded briefly above $100,000 a ton early on Tuesday. this week's short squeeze is nonetheless likely to push . 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. The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. While Russias nickel exports havent been targeted by sanctions, US and European buyers have nonetheless sought alternatives to Russian sources. But today things have reversed, that is, Tsingshan Group has prepared 200,000 . 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 . (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.). 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. Stephen Engle reports. 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. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. Nickel prices usually move a few hundred dollars per tonne in a day. 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. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee . The company has assured creditor banks in China that its . Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. Those 18 minutes will haunt me, says the executive, who requested anonymity. As at January 31, 2023 Glencore holds 72,008,404 Common Shares, representing approximately 70.8% of the issued and outstanding Common Shares. Earlier this week, nickel prices in London spiked by as much as 250 per cent in little more than 24 hours. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. 21 962. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Some market rumors are circulating that Glencore might squeeze Tsingshan on LME Nickel for its 60% stake in a nickel mine in Indonesia. 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 marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. 6W - 9M. 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. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. China's manufacturing activity expanded at the fastest pace in more than a decade in February. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. 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. 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 just a casino.. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . Yet the day before, the market had started to unravel . Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. Nickel. 92 000 MT. Copper. 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 . Xiang wanted to increase Tsingshans production dramatically by producing so-called nickel matte for electric vehicle batteries. Worse, the chaos was spreading to other markets: Zinc prices spiked 15 per cent in a few minutes to a record high, only to collapse again. Activity . Earlier this week, nickel prices in London spiked byas much as 250%in little more than 24 hours. 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. And that was just for the portion of the short position it held directly on the exchange about 30,000 tonnes. 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. 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. Because nickel resists high temperatures, it is used in special steel and superalloys intended for aircraft engines, among other applications. The penalty is part of the $1.5 billion Glencore agreed to pay to resolve bribery and market-manipulation probes in the US, UK and Brazil. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. 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 . Iquique Chile Falconbridge . 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. What does Tsingshan Group's rival, Glencore, do? Those moves sent nickel to a record high of more than $US100,000 ($136,000) a tonne on Tuesday before trading was suspended. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. Please try again later. On average, they predict the company's share price to reach GBX 620.91 in the next year. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. Remember, when prices move up, traders like Xiang who have sold futures contracts face margin calls; they must put up more cash to cover potential losses. Baar, Switzerland 29 July 2022. 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. . By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. It was 5:42 a.m. on March 8 in London when the nickel market broke. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. 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. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. Your password has been changed successfully. Traders and brokers on the open outcry pit at the London Metal Exchange. Long Term . Mid Term. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. 5 000 MT. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. 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. The exchange had serious concerns about the ability of market participants to meet their resulting margin calls, raising the significant risk of multiple defaults. 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