Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Ore is processed at the Strathcona mill. 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. Your password has been changed successfully. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. Vale is the world's largest producer of nickel, one of the most versatile metals in existence. Nickel prices usually move a few hundred dollars per tonne in a day. Some aggrieved traders are already preparing to take legal action against the exchange. Charged with maximising the value of Glencore's physical nickel assets across the global portfolio through supporting collaboration efforts to manage risk and improve operability and performance. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. Canada Nickel Company Inc. $1.24. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Now they recognised that they had to suspend trading. Its also one of the most important raw materials needed in making batteries for electric vehicles. 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. In the short term, apackage of loansfrom Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Nickels price moved sharply higher in the week after Russias military invasion. Project manager for transition of Sudbury INO from CAMP to Deswik. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. At 1am on March 8, the market opened. 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. Get in touch with us now. Xiangs short position has now racked up billions of dollars in losses. Remember, when prices move up, traders such as Xiang who have sold futures contracts face margin calls; they must put up more cash to cover potential losses. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. Coal Department. The paper loss stood at $8 billion on Monday, before violent moves in nickel prices led the London Metal Exchange to suspend trading in the metal on Tuesday, one of the people said. Long Term . 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For participants in commodities exchanges, a price rally is not necessarily good news. It was 5.42 am on March 8 in London when the nickel market broke. 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. Glencore Headquarters. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. From a contractual perspective, you may be . To date, the company has sold a tonne of nickel for an average of $ 18,474. The Chinese government may also play a role. Mid Term. Required fields are marked *. The nickel market was anything but calm. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. By Lucy Battersby. Glencore's original trading business is still a powerhouse and is . 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. You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! 6W - 9M. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. Learn how we produce copper and the uses it is put to. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, CEO of trading house Concord Resources. They had offset their deals with Tsingshan by placing their own short positions on the LME. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. Glencore plc is a Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. Others in the market may also push up prices anticipating that short covering. Activity . Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. Everything changed when Russia invaded Ukraine on February 24. Glencore Nickel. We had a frenzy based on speculation that accelerated on Monday and Tuesday. Our fundamental responsibility is market stability, he said. All prices are listed in Australian Dollars. Chinese tycoon behind nickels big short has power to fuel more drama. 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. Vale and Glencore announced today that they've entered a partnership to begin a feasibility study to explore Nickel Rim South. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. . Were sorry, this feature is currently unavailable. The metal is found in all our homes as a key ingredient of stainless steel. For the LME, the future isunclear. Some think this could herald the end of the exchange itself. But the effects of the short squeeze are likely to be felt in other ways. Located in Kristiansand, Nikkelverk is the largest nickel refinery in the western world producing high-quality nickel and cobalt. But today things have reversed, that is, Tsingshan Group has prepared 200,000 . 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 exchangeunder review. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. Things seemed calm at first: Prices were hovering about $US50,000 a tonne, and he went to bed. 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. Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. 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. Tsingshan Group placed a short nickel order, and the matter of being shorted by the opponent was brushed off. Copper. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Like Comment Share. 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 main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. Xiang isnt just a financial trader making paper bets on price moves. Live from Dubai, connecting Asian markets to the European opens. articles a month for anyone to read, even non-subscribers! Others took to social media. 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 . It decided to cancel all the trades that took place on Tuesday morning some $US3.9 billion of them. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Tsingshan Group is the partner of Huayou that develops the nickel project. Despite the recent upheaval, his company still remains the biggest in the nickel industry. The fallout was immediate. 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. Nickel Rim South Mine. (Podcast). 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. 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. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . 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. Nickel. Traders and brokers on the open outcry pit at the London Metal Exchange. Furious investors and traders. The Nikkelverk Operations. The LME made a near-unprecedented decision. He started increasing his short position on the London Metal Exchange. Not everyone shared his pessimism about prices. Their GLEN share price forecasts range from GBX 540 to GBX 740. The company has assured creditor banks in China that its . In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. 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 . 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. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. Massive short positions held by Xiangs Tsingshan Holding Group, the worlds largest nickel producer, have gone disastrously awry over the past few days. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. 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. Nickel makes steel corrosion-resistant and plays an essential role in our modern world. 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. Its unclear whether he will get his way. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Most analysts sided with Xiang, at least in the medium term, believing that nickel production led by Tsingshan and its competitors in Indonesia would outpace demand. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. 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. Neither party seems very keen on this idea, however. A Glencore spokesman declined to comment. Why bet against nickel when you have a nickel business? Some aggrieved traders are already preparing to take legal action against the exchange. 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. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. 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. 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. Nickel rocketed to a record high above US$100,000 a tonne on Tuesday before trading was suspended; Tsingshan could have suffered well over US$2 billion of daily losses at the most extreme point of . Required fields are marked *. At the time of the LME's trading halt, nickel had gained more than 230% in March. Certain sections of this system have been patented. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. Shanghai's most-traded nickel futures contract . document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Company says it puts it into the league of the largest undeveloped nickel deposits in the world. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. On Monday, a week after trading had been suspended, Xiang was close to securing a loan facility from JPMorgan Chase and other banks that would allow him to maintain his short position and could lead to the market reopening. 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. 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. Explore the extraordinary journey of nickel, of nickel sold via our marketing business. China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. Its unclear whether he will get his way. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. The production of Glencore Nikkelverk in 2019. Now they had to pay big margin calls on the exchange while receiving no margin from their client. 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. 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. 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. Nickel prices, however, has been moving in an uptrend for a long time. For a while, it wasunclear which view of the market would prevail. . Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Senior Mine Engineer. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. 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