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. Are you considering whether or not to trade nickel or want to learn more about the market? read most from bloomberg If nickel prices stay lofty it could complicate the energy transition with electric vehicle batteries costing more to produce. Some aggrieved traders are already preparing to take legal action against the exchange. The LME at the end of the day is a physical metal market, he says. Financial markets are on edge after the London Metal Exchange last week granted a reprieve to the giant Chinese nickel producer, which . Tsingshan is an excellent Chinese enterprise, and our positions and operations dont have any problems.. CCBI Global Markets is another creditor, two separate sources said. Comparable-store sales rose 19.3% in fiscal 2020 and grew another 14.4% year over year in the first nine months of 2021. He started increasing his short position on the London Metal Exchange. "For the period of the standstill, the participating hedge banks agree not to close out positions against Tsingshan or to make further margin calls in respect of existing positions. Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). Still, this weeks short squeeze is nonetheless likely to push costs higher for battery companies and stainless steel makers, eventually feeding through into the price of everyday goods. Neither party seems very keen on this idea, however. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, Final Early Bird Pricing! Known as "Big Shot" in China for his imposing presence in the metal industry, Xiang Guangda, the founder of the world's biggest nickel and stainless-steel firm, Tsingshan, had amassed a short position of more than 150,000 tonnes of nickel, which was about five times the volume of the metal held by the LME and equivalent to approximately Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. The new historic high is nearly twice the previous record of $51,600 in 2007. Our Standards: The Thomson Reuters Trust Principles. One of the sources said Tsingshan's bets on lower nickel prices had amounted to around 300,000 tonnes at an average price between $18,000 and $19,000 a tonne. 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. Contact us | Credit: INF News.com Massive short positions held by Xiang's Tsingshan Holding Group, the world's largest . CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Tsingshan thus desperately scrambled to buy nickel to cover its short position, which only added further upward pressure on prices. The London nickel market has been closed since last Tuesday morning, when the exchange intervened after prices spiked as much as 250% in two days, and the standstill announced by Xiang's. This report studies the Ferronickel market, covering market size for segment by type (Ferronickel (Nickel15%), Ferronickel (Nickel15-25%), etc. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. The XM Research Desk, manned by market expert professionals, provides live daily updates on all the major events of the global markets in the form of market reviews, forex news, technical analysis, investment topics, daily outlook and daily vidoes. This exact scenario emerged in early March in the LMEs nickel market following the escalation of the Russia-Ukraine military conflict, with Chinese nickel-maker Tsingshan Holding Group the unfortunate short seller in this episode. The limits also meant that those buyers seeking to unwind their positions had to join a long queue of sellers waiting to complete their transactions. To gauge the magnitude of the problem, an unnamed source familiar with the trades told the, Nickel trading did resume on March 16, but the exchanges electronic trading system malfunctioned on several occasions after resumption, while preset daily limits on price movements (5 percent on the 16, The LME has been asleep at the wheel, according to Andrew Mitchell, director of nickel research at consulting firm Wood Mackenzie, who spoke to the, But the LME has defended its actions, arguing that the decisions it took were made with full regard to regulatory due process and in the interests of the market as a whole, according to a spokesman for the exchange, who spoke to UK financial-news publication, Manuel A. Muoz European Central Bank (ECB), Miguel Moreno Tripp EGADE Business School | Crowe Global, Flix Villatoro Universidad Adolfo Ibez Business School, Kenneth D. Simonson Associated General Contractors of America (AGC), Dalia A. Kader Commercial International Bank (CIB), Davi Ferreira Veronese University of So Paulo, Maria Paula Bertran University of So Paulo, Thanos Andrikopoulos University of Hull, Tim Johnson JB Super Yachts | TJB Private Travel. This is a fee deposit with a counterparty (often the brokers or exchange) to cover some of the credit risk undertaken to take a short position. But now, serious questions are being raised over the LMEs lack of foresight in not anticipating this incident, especially given the sheer size of Tsingshans short position, which it began to compile last year. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Even at that level, clients of LME brokers had failed to pay some US$500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. Several large brokers got margin calls of close to US$1 billion each over the course of the day. Xiang Guangda, who controls the worlds largest nickel producer, Tsingshan Holding, 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. The London Metal Exchange initially announced rule changes late Monday in respond to a daily spike of as much of 90% (Reuters) Nickel, used in stainless steel and electric-vehicle batteries . Your decision to trade should depend on your attitude to risk, expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. All quotes delayed a minimum of 15 minutes. The price move on March 8 created a systemic risk to the market, the LME said two days later. The three-month LME nickel prices hit an intra-day high at $101,365 a metric tonne on 8 March 2022. Those past scandals forced reforms on the exchange. But according to Bloomberg, the LME refrained from putting it into default, which allowed the broker to settle the margin calls the following day after several clients, including Tsingshan, received loans to cover their positions. 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. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. For most of the past decade, theyd traded between US$10,000 and US$20,000. Tsingshan, among other Chinese companies, is ramping up a wave of new battery-grade nickel capacity in Indonesia. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. (HNI) to produce higher-grade nickel matte. Xiang Guangda in 2017. The Chinese nickel tycoon whose big short position caused chaos reached a deal with his banks to avoid further margin calls, marking a key step toward restoring stability to the market after an unprecedented squeeze. To limit price volatility the LME imposed daily upper and lower price limits of 15% for all its physically delivered metals. A Glencore spokesman declined to comment. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. Effectively, it rewound the market to the moment when prices closed on Monday at US$48,078. He was awakened by a phone call at 5:30 a.m. On the London Metal Exchange, the premier trading and price-formation venue for industrial metals, nickel traded between $10,000 and $20,000 per metric ton and moved about $100 each day. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Nickel short interest was created by Tsingshan. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-era low. The fear was that Tsingshan could not make its margin calls, interim payments to parties on the other side of the trade. The first source said that the banks could potentially earn money on a bridge loan secured by future nickel production if Tsingshan paid them back over time as it produced nickel. And it was already heading higher once more in February prior to the outbreak of war in Eastern Europe, partly on renewed interest in the metal as the global economy continued its recovery from the COVID-19 crisis as well as buoyant demand for electric vehicle batteries, of which nickel is a principal component. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. As with similar short squeezes of the past, such as those involving GameStop and Volkswagen, a short squeeze occurs when a market participant borrows a certain volume of a security and sells it, hoping that its price will fall. Subsequent reports suggested that only one-fifth of Tsingshans total nickel exposure was visible to the exchange; the rest was held in private over-the-counter trades with banks including JPMorgan Chase, BNP Paribas, Standard Chartered and United Overseas Bank Ltd. As such, Guangda was aiming for his massive short position to dominate the market and send the LME nickel price down. The frenzied move the largest-ever on the LME came as investors and industrial users who had sold the metal scrambled to buy the contracts back after prices initially rallied on concerns . For a while, it wasunclear which view of the market would prevail. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. Pada titik ini, posisi short Tsingshan dibekukan. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. 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But nothing could prepare the market for what was about to follow, with the Russia-Ukraine conflict sending prices skywards on global supply concerns. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Today, Tsingshan is the biggest nickel producer in the world, accounting for around 20% of the global market. JPMorgan Chase & Co (JPM.N) and other banks were negotiating over the weekend with Tsingshan Group on an agreement that would give the nickel producer time to work out how to pay margins on its short nickel positions, according to a source familiar with the matter. Distribution and use of this material are governed by Nikel Terbang, Pemilik Smelter RI Asal China Rugi Rp 115 T. Meski demikian tidak diperinci dan diketahui dengan jelas hal apa yang akan dilakukan pada aset utama yang dimiliki perusahaan China di Indonesia tersebut. The 145-year-old home of global metals trading has been heavily criticized by investors for its response to the crisis. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. Late on Monday, the LME also allowed traders to defer delivery obligations on all its main contracts -- including nickel -- an unusual step that underscores the pressure on commodities generally from the moves to isolate Russia economically. Q. In response to the crisis, the LME suspended nickel trading on 8 March and cancelled all trades executed on or after 00:00 UK time on 8 March 2022 in the inter-office market and on LMEselect (LME online trading platform) until further notice.. Tsingshan sold 200,000 ton March 2023 contracts at price of $20 per kilo. HONG KONGChinese nickel titan Tsingshan Holding Group faces billions of dollars in trading losses, people familiar with the company said, after .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}Russias war in Ukraine set off an unprecedented rise in the price of a key metal used in stainless steel and electric-vehicle batteries. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. But since last year, Tsingshan has also started to produce a source of nickel for batteries. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . And thank you everyone for your attendance on today's call for the Nickel Industries Full Year 2022 Results. Xiang didnt believe the rally would last. This copy is for your personal, non-commercial use only. The simple fact here is that we did not have visibility over the size of the risk, Matthew Chamberlain, the LMEs chief executive, also stated. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. This copy is for your personal, non-commercial use only. The London Metal Exchange plans to resume trading in nickel, a week after it was suspended when the price of the metal surged to over $100,000 a ton. Bloomberg News' Joe Deaux reports. The difference is that nickel is a commodity that touches the entire global economy. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. You should do your own research, looking at the latest news, technical analysis, and analyst commentary before trading. Just after 6 a.m., the price of nickel passed US$100,000 a ton. Tsingshan is also NIC's majority shareholder with a 21.15% stake through Shanghai Decent Investment. 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. Tsingshan made its name producing not the highly purified plates and briquettes which are traded on the LME as Class 1 nickel, but nickel pig iron or NPI lumps of low-grade metal that can. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. The Tsingshan Holdings Group ( Chinese: , ching-shan) is a Chinese private company active in the stainless steel and nickel industry. Xiangs short position has now racked upbillions of dollars in losses. The LME suspended nickel trading in the early trading session on March 8 after prices more than doubled, breaching $100,000/mt mark and briefly reaching a record high of $101,365/mt. 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. Moscow's invasion of Ukraine and the west's moves to sanction Russia, a key major supplier, have electrified an already bullish nickel market. When it was flying towards US$100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerage Bands Financial Ltd. and a former LME board member. 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. Nickel rocketed to a record high above $US100,000 a tonne on Tuesday, driven in part by Tsingshan and its brokers activity, before trading was suspended. The industry leader for online information for tax, accounting and finance professionals. Opinion. One of the world's biggest nickel and stainless steel producers, Tsingshan started building a short position -- a wager that prices will fall -- in the nickel market last year. The Morowali park mainly produces nickel pig iron for stainless steel. Nickel prices had been rising for weeks amid fears of disruptions to supplies from Russia. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Is the Strength of Big Tech Regulation Sufficient at Present? While Mark Thompson, executive vice-chairman at mining-development company Tungsten West, tweeted: The LME is now very likely going to die a slow, self-inflicted death through the loss of confidence in it and its products.. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. Chinese entrepreneur Xiang Guangda has been caught out by nickel's price surge. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. It said the banks agreed not to make margin calls or close out their positions against Tsingshan while the company is resolving its nickel margin and settlement requirements. Brokers, in turn, must hold margin at the clearing house, LME Clear. We expect the EBITDA margin to be around . Beijing is supportive of him, Xiang told contacts recently. call +44 20 3097 8888 support@capital.com. 4.3 Global Ferro Nickel Sales Volume, Revenue, Price and Gross Margin (2016-2022) 4.4 United States Ferro Nickel Sales Volume, Revenue, Price and Gross Margin (2016-2022) As for the nickel market itself, prices remain elevated compared to before the short squeeze, possibly reflecting the persistence of Western sanctions on Russia. Why bet against nickel when you have a nickel business? The tightness in the market had been exacerbated by the presence of an unidentified trader who, according to exchange data, controlled somewhere between 50 per cent and 80 per cent of nickel warehouse warrants monitored by the LME as of last month. Nickel prices shot up as much as 250% in two days on the LME at the start of this week. While the exact scale of Mr Xiangs losses is unclear, Tsingshans short position on the London Metal Exchange is in the region of 100,000 tonnes of nickel, people familiar with the matter said.

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