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. Beijing is supportive of him, Xiang told contacts recently. To date, the company has sold a tonne of nickel for an average of $ 18,474. For the LME, the future isunclear. Xiangs short position has now racked up billions of dollars in losses. As Contract Writer / Coordinator, you will be part of the Contract Team, which is a team within the Coal Department. Xiang wanted to increase Tsingshans production dramatically by producing so-called nickel matte for electric vehicle batteries. The fallout was immediate. 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. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. Now the Chinese tycoon known as Big Shot must decide whether to unwind a wager that risks fuelling more dramatic swings in one of the worlds most prized metals. (Bloomberg) -- A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after the metal surged more than 170% in two days, according to people familiar with the matter. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. Even at that level, clients of LME brokers had failed to pay some $US500 million of margin calls in relation to their short positions on the exchange, says a person familiar with the matter. By Lucy Battersby. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. At 1am on March 8, the market opened. We produce some of the worlds purest nickel. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Tsingshan accounted for about half that amount. 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. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Worse, the chaos was spreading to other markets: Zinc prices spiked 15% in a few minutes to a record high, only to collapse again. 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. Glencore UK Ltd, Izimbiwa Coal (Pty) Ltd, Katanga Mining Limited, Kazzinc Ltd., Koniambo Nickel S.A.S., Magdeburg, Mangoola Coal Operations Pty Limited, McArthur River Mining Pty Ltd, Minera . 02 March 2023. Formerly called Companhia Vale do Rio Doce, Vale is a diversified multinational metals and mining company founded in 1942, and headquartered in Rio de Janeiro, Brazil. 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. Your email address will not be published. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. He started increasing his short position on the London Metal Exchange. Provided short/mid/long/strategic schedules using Deswik. Xiang was aware of flaws in his strategy, people familiar with the matter said. Our nickel operations are in Canada, Australia, Norway, and New Caledonia. Why? In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. Its not just a casino. Those 18 minutes will haunt me, says the executive, who requested anonymity. 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. Not everyone shared his pessimism about prices. The production of Glencore Nikkelverk in 2019. Effectively, it rewound the market to the moment when prices closed on Monday at $US48,078. The world's top five nickel-producing companies. 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. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. Undeterred, the Chinese tycoon has told banks he wants to maintain his position, and has asked them to keep funding him despite the losses. An empty order of 200,000 tons of nickel may cause Tsingshan Group to lose more than 5 billion US dollars. 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. Mark Hansen, chief executive officer of Concord Resources. LME brokers and their clients were hit with margin call after margin call. 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It traded briefly above $100,000 a ton early on Tuesday. 2023 Glacier Media Group, All Rights Reserved. Evaporating liquidity. People forgot that this isnt a video game retailer; its an important physical commodity.. Now they had to pay big margin calls on the exchange while receiving no margin from their client. Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. The giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. In turn, the extraction of precious metals by the company in 2021, i.e. 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. 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 . Mar 16, 2022 - 8.00am. Bloomberg Daybreak Middle East. The fallout was immediate. We produce some of the world's purest nickel. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. He was awakened by a phone call at 5:30 a.m. Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. Glencore is one of the largest miners in the world that supply copper and nickel, two of my essential CCLANGs for the future of electrification. LME brokers and their clients were hit with margin call after margin call. Vale and Glencore announced today that they've entered a partnership to begin a feasibility study to explore Nickel Rim South. 1w. Stephen Engle reports. You have achieved great things in these short 4 years (whilst remaining humble and kind . People forgot that this isnt a video game retailer; its an important physical commodity. But much of Chinas academic and business community did not believeRussia would attackits neighbor. Cash and short-term investments. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. Several large brokers got margin calls of close to $1 billion each over the course of the day. We had a frenzy based on speculation that accelerated on Monday and Tuesday. The price was frozen, below the record high but still at $80,000 a ton. INF News.com. Finance > Capital-markets. 2W - 6W. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Nickel rocketed to a record high above $100,000 a ton on Tuesday, driven in part by Tsingshan and its brokers activity, before trading was suspended. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. 389 8 Comments. From a contractual perspective, you may be . The Nikkelverk Operations. Vale - 208,000 metric tonnes. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. How to Geta Free Flight to Hong Kong in 500,000 Airline Ticket Giveaway, Stocks Drop for a Second Day; Yields Stay Elevated: Markets Wrap, The SPAC Fad Is Ending in a Pile of Bankruptcies and Fire Sales, Apple Suppliers Are Racing to Exit China, AirPods Maker Says, China Warns Hedonistic Bankers to Toe the Communist Party Line. 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. People forgot that this isnt a video game retailer; its an important physical commodity.. gold and silver, amounted to 809 and 31 516 tons, respectively. Nickel boosts the energy within batteries and, at the same time, allows battery makers to reduce the use of more expensive cobalt. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. They had offset their deals with Tsingshan by placing their own short positions on the LME. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. . Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. The dollar hit a one-week low earlier Wednesday after China's yuan gained. Ore is processed at the Strathcona mill. 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. 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. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. The LMEs special committee held another call at about 6am. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Then came a geopolitical crisis that caught him unawares. In August 2021, Glencore increased its medium-term emission reduction target to a 50% reduction by 2035 on 2019 levels and introduced a new short-term target of a 15% reduction by 2026 on 2019 levels. On average, they predict the company's share price to reach GBX 620.91 in the next year. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Leeuwin managing director Chris Piggott was a senior geologist at ASX-listed Bellevue when it defined its core discoveries, and was part of the team that defined the greenfields Nova-Bollinger. Everything changed when Russia invaded Ukraine on February 24. 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. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Glencore-backed Leeuwin ready to set sail. 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. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. 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. Nickels price moved sharply higher in the week after Russias military invasion. What does Tsingshan Group's rival, Glencore, do? 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. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. Nickel prices usually move a few hundred dollars per ton in a day. 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 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. 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. The company had plans to produce 850,000 tonnes of nickel in 2022, an increase of 40 per cent in a year, says a person briefed on them. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metal the type deliverable on the LME. Glencore Nickel. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . Iquique Chile Falconbridge . Tsingshan accounted for about half that amount. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. 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. For most of the past decade, they'd traded between $10,000 and $20,000. #GlencoreCopper #MetalOfTheFuture https://lnkd.in/eEqPmJn9. That could either result in a huge loss for Tsingshan or the sale of a more than 60 percent stake in the companys Indonesian nickel mine and interest in its industrial park in the southeast Asian country, the report said. Anyone using the LME needs to understand that. Learn how we produce copper and the uses it is put to. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. 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