Nickel makes steel corrosion-resistant and plays an essential role in our modern world. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. 21 962. Several large brokers got margin calls of close to $1 billion each over the course of the day. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. 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. Copper. Neither party seems very keen on this idea, however. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on 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. Glencore's original trading business is still a powerhouse and is . This matters beyond the cozy world of . A Glencore spokesman declined to comment. 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. Your password has been changed successfully. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. 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. 6 kt/a nickel in concentrate). 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 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 . LME brokers and their clients were hit with margin call after margin call. Xiang Guangda, the billionaire owner of Tsingshan Holding Group. Mid Term. Nickel prices usually move a few hundred dollars per tonne in a day. The two major mining companies in Sudbury are working together to . For participants in commodities exchanges, a price rally is not necessarily good news. LME brokers and their clients were hit with margin call after margin call. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Certain sections of this system have been patented. gold and silver, amounted to 809 and 31 516 tons, respectively. Those moves sent nickel to a record high of more than $US100,000 ($136,000) a tonne on Tuesday before trading was suspended. 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. Nickelcopper ores have been mined there since 1928. The LMEs history dates back to the early 19th century, when metal traders drew a circle in the sawdust on the floor of the Jerusalem Coffee House in the City of London. Others took to social media. . 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 nickel market was anything but calm. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. 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. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. articles a month for anyone to read, even non-subscribers! 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. 1. Xiang has told his banks and brokers that he still thinks the nickel price will fall andwants to keephis short position, Bloomberg reported on Thursday, citing people familiar with the matter. Our fundamental responsibility is market stability, he told Bloomberg TV. 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. View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. From a contractual perspective, you may be . People forgot that this isnt a video game retailer; its an important physical commodity.. Sign up to get it every weekday morning. 39 000 MT. The price move on March 8 created a systemic risk to the market, the LME said two days later. I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. He started increasing his short position on the London Metal Exchange. 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 LME suspended nickel-market trading on Tuesday and the Shanghai Futures Exchangefollowed suita day later, after prices on Chinas top commodities bourse hit their daily upward limit. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. 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 . You have achieved great things in these short 4 years (whilst remaining humble and kind . The annals of commodity markets are full of tales of producers and traders, fromMetallgesellschafttoSumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. 92 132 MT. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . 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. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trimtheir bets. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. The price was frozen, below the record high but still at $80,000 a ton. Several large brokers got margin calls of close to $US1 billion each over the course of the day. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. 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. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Evaporating liquidity. Cobalt. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. Nickel prices usually move a few hundred dollars per ton in a day. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Please try again later. Executives fromGoldman Sachs Group Inc.voiced their displeasure at the decision on a call with Chamberlain. Bloomberg Daybreak Middle East. Were sorry, this feature is currently unavailable. . 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. Traders and brokers on the open outcry pit at the London Metal Exchange. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. While few observers believed Xiang could reach that level of production, he was confident. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. 389 8 Comments. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. 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 . When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. 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. Credit: INF News.com. . Just after 6 a.m., the price of nickel passed $100,000 a ton. 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. Sulphuric acid. Some aggrieved traders are already preparing to take legal action against the exchange. One thing is sure: If Xiang can weather the storm, Tsingshans nickel producing assets stand to benefit from the higher prices, offsetting losses from the short. UNFORGIVABLE, tweeted Mark Thompson, a former trader at Trafigura and Apollo. Xiang isnt just a financial trader making paper bets on price moves. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. To date, the company has sold a tonne of nickel for an average of $ 18,474. Sr. Exploration Geologist CMDIC Collahuasi 2006 - 2007 1 year. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . Earlier this week, nickel prices in London spiked by as much as 250 per cent in little more than 24 hours. Xiang didnt believe the rally would last. For Xiangs big short position, that was painful. 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 . Tsingshan Group is the partner of Huayou that develops the nickel project. The latest price was A$0.04 (25-minute delay). Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. 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. . 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. However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . 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. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. The difference is that nickel is a commodity that touches the entire global economy. Save my name, email, and website in this browser for the next time I comment. . Furious investors and traders. Production 2019. Xiangs short position has now racked upbillions of dollars in losses. During the fiscal year 2021, the Swiss-based company Glencore reported a nickel production of some 102.3 thousand metric tons. 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. . Hes in the physical nickel business. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. 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. Elon Musk wanted to buy 10-20% of Glencore, but refused to. 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. This type is different from the mainstream ferro-nickel and nickel pig iron. 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. Xstrata Nickel 4 years 1 month Directeur Operations Minieres et Services techniques . Everything changed when Russia invaded Ukraine. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. Glencore-backed Leeuwin ready to set sail. But while the short squeeze has weighed on Tsingshan's . We have interests in a range of mining assets on four continents. Like Comment Share. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. 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. Xiang isnt just a financial trader making paper bets on price moves. Some think this could herald the end of the exchange itself. (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 LME made a near-unprecedented decision. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Short Interest; Premarket Screener . This suggests a possible upside of 27.1% from the stock's current price. Among them were some of the biggest names on Wall Street. 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. In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. For most of the past decade, they'd traded between $10,000 and $20,000. 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. At 1am on March 8, the market opened. Resetting your password will log you out of all your active Yicai Global sessions. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Feb 2021 - Dec 202111 months. Tsingshan Group placed a short nickel order, and the matter of being shorted by the opponent was brushed off. 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. Everything changed when Russia invaded Ukraine on February 24. Beijing is supportive of him, Xiang told contacts recently. For the LME to cancel nickel trades between willing buyers and sellers is unforgivable. 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 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 company has assured creditor banks in China that its . But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. Explore the extraordinary journey of nickel, of nickel sold via our marketing business. Trading and mining giant Glencore Plc 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 . 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. Despite the recent upheaval, his company still remains the biggest in the nickel industry. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. 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 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. Those moves sent nickel to a record high of more than $100,000 a ton on Tuesday beforetrading was suspended. 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. Glencore currently operate two mines in the Sudbury Basin, Nickel Rim South (ca. Its unclear whether he will get his way. For a while, it wasunclear which view of the market would prevail. He was awakened by a phone call at 5:30 a.m. The head of one London metals brokerage recalls feeling sick as he watched the moves, realizing what the spike in prices would mean for his company, the market, and the global metals industry. 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. Then came a geopolitical crisis that caught him unawares. At the time of the LME's trading halt, nickel had gained more than 230% in March. LME chief executive Matthew Chamberlain had stayed up to watch. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Nickels price moved sharply higher in the week after Russias military invasion. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. 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. Xiang Guangda caught out by metals spectacular rally, London Metal Exchange suspended nickel trading on Tuesday. A Glencore spokesman declined to comment. It was 5.42 am on March 8 in London when the nickel market broke. 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. this week's short squeeze is nonetheless likely to push . 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. If you don't see the email, check your junk, spam or other folders. Worse, the chaos was spreading to other markets: Zinc prices spiked 15% in a few minutes to a record high, only to collapse again. 2023 Glacier Media Group, All Rights Reserved. Vale and Glencore announced today that they've entered a partnership to begin a feasibility study to explore Nickel Rim South. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. As Contract Writer / Coordinator, you will be part of the Contract Team, which is a team within the Coal Department. 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. 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 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. Share. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. Glencore Nickel. 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. Xiangs short position has now racked up billions of dollars in losses. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. The LME suspended nickel-market trading on Tuesday and the Shanghai Futures Exchange followed suit a day later, after prices on Chinas top commodities bourse hit their daily upward limit. We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. 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