92 000 MT. (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.). 2W - 6W. On this day, however, metal traders were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Evaporating liquidity. 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. 389 8 Comments. 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. The giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. (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.). 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. 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. Required fields are marked *. 485,996 followers. The investment is part of Ruperts non-brokered private placement for gross proceeds of about $35 million. 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. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. A year after the short squeeze that brought the LME to the brink of collapse, the nickel market remains barely functional, with trading volumes sharply lower and prices regularly experiencing wild . Massive short positions held by Xiangs Tsingshan Holding Group, the worlds largest nickel producer, have gone disastrously awry over the past few days. . Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. Those moves sent nickel to a record high of more than $100,000 a ton on Tuesday beforetrading was suspended. Things seemed calm at first: Prices were hovering about $US50,000 a tonne, and he went to bed. Shanghai's most-traded nickel futures contract . This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, chief executive officer of trading houseConcord Resources Ltd.We had a frenzy based on speculation that accelerated on Monday and Tuesday. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. Others in the market may also push up prices anticipating that short covering. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . Tsingshan accounted for about half that amount. 5 000 MT. Last modified on Wed 15 Feb 2023 06.23 EST. Nickel is mainly used in the production of stainless steel because it improves its strength and resistance to corrosion. Yet the day before, the market had started to unravel . Because nickel resists high temperatures, it is used in special steel and superalloys intended for aircraft engines, among other applications. Its unclear whether he will get his way. Xiang didnt believe the rally would last. Cobalt. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. 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, Chamberlain insisted on March 9 that the solvency of the LME itself was never in doubt. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. Glencore's disclosure follows a forecast earlier this month that there needs to be greater investment in nickel production, even though the short-term picture suggests there will be a glut of the metal. 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. 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. For a while, it wasunclear which view of the market would prevail. 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. For participants in commodities exchanges, a price rally is not necessarily good news. But much of Chinas academic and business community did not believeRussia would attackits neighbor. Short Term. At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. 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. Follow the topics, people and companies that matter to you. China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. If you don't see the email, check your junk, spam or other folders. Then, as now, a key factor was the intervention of the exchange. Golf's Greatest Holes: Golfing legend Paul McGinley takes television presenter Chris Hollins on a tour of the best golf courses in Ireland and Northern Ireland. 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. Production 2019. 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. Your email address will not be published. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, CEO of trading house Concord Resources. Save my name, email, and website in this browser for the next time I comment. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. 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. 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. 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. Rio Tinto, the world's second-largest mining company by market capitalization, last week said it would lift annual capital investment to as much as $10 billion in 2024 and 2025, up around 25% on . Elon Musk wanted to buy 10-20% of Glencore, but refused to. 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. 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. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. 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. Certain sections of this system have been patented. Once its industrial complex reaches peak p. Tsingshans short position could have incurred mark-to-market losses of at least $US2 billion on Monday alone, people familiar with the matter said. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. 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. Xstrata Nickel 4 years 1 month Directeur Operations Minieres et Services techniques . How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Glencore Nickel. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Poseidon Nickel is listed on the Australian Securities Exchange (ASX) and has a trailing 12-month revenue of around AUDC$256,000. Nickel prices usually move a few hundred dollars per tonne in a day. 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 . Credit: INF News.com. Nickel. Baar, Switzerland 29 July 2022. Market speculation has it that Tsingshan has a short position of about 200,000 tons of nickel, which it cannot deliver due to a lack of spot product after being assailed and squeezed out by US and European commodity futures giants such as Glencore, China Securities Journal reported yesterday. Some market rumors are circulating that Glencore might squeeze Tsingshan on LME Nickel for its 60% stake in a nickel mine in Indonesia. 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 . The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. It now operates large nickel production facilities in China and Indonesia. 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. 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. Xiangs short position has now racked upbillions of dollars in losses. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. For Xiangs big short position, that was painful. MT. 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. Sulphuric acid. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. Finance > Capital-markets. 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. Everything changed when Russia invaded Ukraine. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. 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 Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. It was 5:42 a.m. on March 8 in London when the nickel market broke. In turn, the extraction of precious metals by the company in 2021, i.e. 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 . But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. Just after 6am, the price of nickel passed $US100,000 a tonne. 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. For participants in commodities exchanges, a price rally is not necessarily good news. The metal is found in all our homes as a key ingredient of stainless steel. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. At current prices, nickel would comprise 12% of Glencore's EBITDA. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . Then on March 7, nickels price began its parabolic ascent, surging from $30,000 a ton to more than $50,000. 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. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Its not just a casino.. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. The nickel market was anything but calm. 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. 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. Nickel prices usually move a few hundred dollars per ton in a day. 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. When it was flying towards $US100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerage Bands Financial and a former LME board member. . 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. Like Comment Share. Nickel Rim South Mine. Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Why? Qingshan Holding Group,Nickel,Futures Contract, Paris Looms as Europe's Largest Financial Market, French Economy Minister Says, Alibaba, Spain's El Corte Ingles Department Store Ally on Digital Retail, China's GEM to Supply 100,000 Tons of Lithium Battery Materials to Korea's Ecopro, Toshiba Home Appliances Returns to Profit After Midea Takeover, Chairman Says, How AR is Poised to Change Business Forever. Copper. People forgot that this isnt a video game retailer; its an important physical commodity.. We produce some of the worlds purest nickel. 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. Several large brokers got margin calls of close to $US1 billion each over the course of the day. The difference is that nickel is a commodity that touches the entire global economy. 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 . Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. This type is different from the mainstream ferro-nickel and nickel pig iron. The company had plans to produce 850,000 tons of nickel in 2022, an increase of 40% in a year, according to a person briefed on them. . Live from Dubai, connecting Asian markets to the European opens. 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Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. 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. Hes in the physical nickel business. 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. (Podcast). Mark Hansen, chief executive officer of Concord Resources. Among them were some of the biggest names on Wall Street. To date, the company has sold a tonne of nickel for an average of $ 18,474. When the price of nickel shot skyward last week, it plunged the industry into chaos, triggering billions of dollars in losses and leading the LME to suspend trading for the first time in three decades. In terms of revenue, the global largest two companies occupy a share . Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. Those moves sent nickel to a record high of more than $US100,000 ($136,000) a tonne on Tuesday before trading was suspended. (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. 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. MINK. The price was frozen, below the record high but still at $US80,000 a tonne. Xiang didnt believe the rally would last. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metal the type deliverable on the LME. , Mar 23, 2022. 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. The LMEs special committee held another call at about 6am. Inability to deliver the products was a big problem for Tsingshan, the analyst added, noting that the company has nickel iron, stainless steel, and nickel matte but noelectrolytic nickel, which is the type traded on the LME. Ore is processed at the Strathcona mill. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. 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. 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. At the time of the LME's trading halt, nickel had gained more than 230% in March. Provided short/mid/long/strategic schedules using Deswik. View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. 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. Required fields are marked *. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Some aggrieved traders are already preparing to take legal action against the exchange. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. #GlencoreCopper #MetalOfTheFuture https://lnkd.in/eEqPmJn9. Our fundamental responsibility is market stability, he said. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Now, the traders watched with a mixture of horror and grim fascination as the price went skyward. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Your email address will not be published. Share. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. 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. A market that many veterans simply describe as "broken." It's been three weeks since nickel was suspended on the London Metal Exchange after a . Yet the firm's lucrative . Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. Glencore Nickel. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. 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. . 3.28% . China's manufacturing activity expanded at the fastest pace in more than a decade in February. All Rights Reserved. Beijing is supportive of him, Xiang told contacts recently. This suggests a possible upside of 27.1% from the stock's current price. 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. Perth, Western Australia, Australia. While few observers believed Xiang could reach that level of production, he was confident. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. What does Tsingshan Group's rival, Glencore, do? People forgot that this isnt a video game retailer; its an important physical commodity. Nickel prices, however, has been moving in an uptrend for a long time. 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. 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. Tsingshan is an excellent Chinese enterprise.. 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. And companies that matter to you a key factor was the dominant holder of nickel alloy and largest! Few observers believed Xiang could reach that level of production, he started out making for... Calls of close to $ US1 billion each over the course of the $ 80,000 nickel.... Its extremely unusual for an exchange to cancel whole sessions of trading after fact. 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