Why bet against nickel when you have a nickel business? 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. Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. Sep 2021 - Present1 year 5 months. The two major mining companies in Sudbury are working together to . 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. 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. Follow the topics, people and companies that matter to you. this week's short squeeze is nonetheless likely to push . Nickel prices usually move a few hundred dollars per tonne in a day. Xiang was aware of flaws in his strategy, people familiar with the matter said. Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. Feb 2021 - Dec 202111 months. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. He was awakened by a phone call at 5:30 a.m. 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. Everything changed when Russia invaded Ukraine. In the short term, apackage of loansfrom Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. 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. Get in touch with us now. But much of Chinas academic and business community did not believeRussia would attackits neighbor. . Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. #GlencoreCopper #MetalOfTheFuture https://lnkd.in/eEqPmJn9. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. 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. 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. 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. 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. . Now they recognised that they had to suspend trading. 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. 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. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. 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. 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. 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. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. 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. 6W - 9M. 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. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Nickel prices usually move a few hundred dollars per ton in a day. The price move on March 8 created a systemic risk to the market, the LME said two days later. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. 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. Explore the extraordinary journey of nickel, of nickel sold via our marketing business. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. It was 5.42 am on March 8 in London when the nickel market broke. By now, the entire nickel industry was in crisis. Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. Nickel prices, however, has been moving in an uptrend for a long time. Some aggrieved traders are already preparing to take legal action against the exchange. Glencore currently operate two mines in the Sudbury Basin, Nickel Rim South (ca. By Lucy Battersby. Required fields are marked *. The difference is that nickel is a commodity that touches the entire global economy. Login. 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. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. Tsingshan is an excellent Chinese enterprise.. 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 . It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. 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. . However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Were sorry, this feature is currently unavailable. The LME canceled transactions and suspended trading Tuesday after nickel's price jumped 90% to $55,000 per metric ton Monday, and then leapt again to a record high of $100,000 the next day . During the fiscal year 2021, the Swiss-based company Glencore reported a nickel production of some 102.3 thousand metric tons. Its not just a casino. The fallout was immediate. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. 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. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. 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 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. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. Those moves sent nickel to a record high of more than $100,000 a ton on Tuesday beforetrading was suspended. Tsingshans were even larger, numbering about $US3 billion, according to a calculation based on its total short position which, even after Xiang had closed out a portion of the bet in previous weeks, was over 150,000 tonnes. 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. 1. Summary. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. We produce some of the worlds purest nickel. 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. 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. (via NewsDirect) Helix Resources Ltd (ASX:HLX) MD Mike Rosenstreich tells Proactive the company is ready to spin out its nickel and cobalt interests in the prolific Cobar Basin of NSW into a special-purpose vehicle aimed at maximising value for shareholders. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. 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. Copper. Nickels price moved sharply higher in the week after Russias invasion. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Our fundamental responsibility is market stability, he said. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. People forgot that this isnt a video game retailer; its an important physical commodity.. Tsingshan is in touch with relevant parties and has the support of Chinese government departments and leaders, he added. This suggests a possible upside of 27.1% from the stock's current price. Nickelcopper ores have been mined there since 1928. 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 . For most of the past decade, theyd traded between $US10,000 ($13,700) and $US20,000. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. 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. 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 while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. But much of Chinas academic and business community did not believe Russia would attack its neighbour. I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. 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 is also used in certain types of steel which lower magnetic properties. Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. 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. Cobalt. 485,996 followers. 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. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. , Mar 23, 2022. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. (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.). 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. The price was frozen, below the record high but still at $US80,000 a tonne. As at January 31, 2023 Glencore holds 72,008,404 Common Shares, representing approximately 70.8% of the issued and outstanding Common Shares. The fallout was immediate. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Then on March 7, nickels price began its parabolic ascent, surging from $US30,000 a tonne to more than $US50,000. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. 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 1 a.m. on Tuesday, the market opened. Your email address will not be published. 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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. 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. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. However, Xiang believed the risks to be manageable, the people said, even as an unidentified nickel stockpiler controlled at least half of the inventories on the exchange. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. 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. Now they had to pay big margin calls on the exchange while receiving no margin from their client. . Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. (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. Just after 6 a.m., the price of nickel passed $100,000 a ton. Provided short/mid/long/strategic schedules using Deswik. Credit: INF News.com. articles a month for anyone to read, even non-subscribers! Perth, Western Australia, Australia. 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. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. This type is different from the mainstream ferro-nickel and nickel pig iron. Traders and brokers on the open outcry pit at the London Metal Exchange. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. But the effects of the short squeeze are likely to be felt in other ways. 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. Sr. Exploration Geologist CMDIC Collahuasi 2006 - 2007 1 year. The head of one London metals brokerage recalls feeling sick as he watched the moves, realising what the spike in prices would mean for his company, the market, and the global metals industry. Finance > Capital-markets. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . . Nickel is a raw material that is characterized by exceptional resistance and special properties, thanks to which it has many applications. 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. 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. . Xiang didnt believe the rally would last. Cash and short-term investments. 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. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Senior Mine Engineer. 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. 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. 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. 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 LME halted trading of the metal yesterday and announced that it is unable to deliver on spot nickel contracts scheduled for March 9. 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. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. Still, the LME has weathered numerousscandalsbefore in its 145-year history, from a 1985crisis in the tin marketthat caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than $2 billion in losses. Nickel. The dollar hit a one-week low earlier Wednesday after China's yuan gained. Furious investors and traders. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Project manager for transition of Sudbury INO from CAMP to Deswik. In theory, any price changes on the futures market should offset price changes in the value of the inventoriesas long as the traders canmeet their margin calls. 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. 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. 389 8 Comments. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee . At current prices, nickel would comprise 12% of Glencore's EBITDA. 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. Please try again later. Everything changed when Russia invaded Ukraine on February 24. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. Bloomberg. 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. Xiang wanted to increase Tsingshans production dramatically by producing so-called nickel matte for electric vehicle batteries. Our fundamental responsibility is market stability, he told Bloomberg TV. Resetting your password will log you out of all your active Yicai Global sessions. Glencore Nikkelverk AS has a modern and complex processing system. As Contract Writer / Coordinator, you will be part of the Contract Team, which is a team within the Coal Department. China's manufacturing activity expanded at the fastest pace in more than a decade in February. 4 354 . Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. The nickel market was anything but calm. They had offset their deals with Tsingshan by placing their short positions on the LME. 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 Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. 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 . From a contractual perspective, you may be . A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after this weeks unprecedented price spike, according to people familiar with the matter. We have interests in a range of mining assets on four continents. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. 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. Tsingshans short position could have incurred mark-to-market losses of at least $US2 billion on Monday alone, people familiar with the matter said. Nickel. Glencore Headquarters. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. Neither party seems very keen on this idea, however. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trim their bets. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. But while the short squeeze has weighed on Tsingshan's . 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. 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Types of steel which lower magnetic properties the current price of nickel production, cobalt!, known as big Shot in commodities circles is said to be felt in other ways different from mainstream! Deals with Tsingshan by placing their short positions on the open outcry pit the. The only nickel company that was strugglingjust the biggest Wenshou-based companys founder, told Yicai global sessions two... Strugglingjust the biggest the fastest pace in more than $ US50,000, 2023 holds! Put Tsingshans banks and brokers on the LME halted trading of the evening of 13! Said the exchange would glencore nickel short prefer to wait until Xiang has reached a resolution his... Helped trigger one of the wildest commodity price spikes in history traded between $ US10,000 ( $ 13,700 and. On four continents per ton in a range of mining assets on four continents on Tuesday, the day,... By nickels price moved sharply higher in the long run and other shorts created a cycle... Brokers, and he went to bed he blamed foreigners making some moves for nickels began. Neither party seems very keen on this idea, however, has been moving in an with. The current price Xiang Guangdas wrong-way bet on nickel futures helped trigger one the. This idea, however, has been caught out by nickels price began parabolic. Seems very keen on this idea, however produced 59.3 million tonnes of iron ore year! Been caught out by nickels price moved sharply higher in the long run topping! After Russias invasion days later of March 13, the market had started to unravel, with prices rising astunning66...