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. For Xiangs big short position, that was painful. Certain sections of this system have been patented. 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. 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. I'll discuss why. Anyone using the LME needs to understand that. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. 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. However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. 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. When prices rose above $20,000 he would consider shorting nickel, the people said, because his production costs in Indonesia were as low as $10,000 a ton. 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. Explore the extraordinary journey of nickel, of nickel sold via our marketing business. Beijing is supportive of him, Xiang told contacts recently. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. 20 kt/a nickel in concentrate) and Fraser Morgan (ca. In theory, any price changes on the futures market should offset price changes in the value of the inventories as long as the traders can meet their margin calls. Mark Hansen, chief executive officer of Concord Resources. You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! For a while, it wasunclear which view of the market would prevail. 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. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. 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. EV Nickels stock soars after announcing enormous maiden mineral resource in Ontario, Anglo seeks to invest in start-ups to cut steel CO2 emissions, Agnico Eagle reinvests in Rupert Resources and its Ikkari gold project, Glencore ordered to pay $700 million by US judge in bribery case, https://dtmagazine.com/money724-302022.php#wrap, 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. 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 . Having capacity but no inventory puts Tsingshan at a disadvantage, he said. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. Our nickel operations are in Canada, Australia, Norway, and New Caledonia. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. The LMEs special committee held another call at about 6am. LME chief executive Matthew Chamberlain had stayed up to watch. 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. 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 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. Vale - 208,000 metric tonnes. Baar, Zug, Switzerland. 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. Stephen Engle reports. 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. I see all automakers within a short time creating their own 4680 . Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. Iquique Chile Falconbridge . For most of the past decade, theyd traded between $10,000 and $20,000. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. The LME made a near-unprecedented decision. Nickel makes steel corrosion-resistant and plays an essential role in our modern world. Anyone using the LME needs to understand that. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. Glencore plc was newly . Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . 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. 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, with prices rising a stunning 66 per cent to $US48,078. Tsingshan mostlymakesstainless steelthat isused inthepetroleum, chemicals, auto,and other fields. 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. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Explore the latest reports and results, including financial results, production reports and our annual report. 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. The LME at the end of the day is a physical metal market, he says. (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.). Your email address will not be published. Xiang isnt just a financial trader making paper bets on price moves. Undeterred, the Chinese tycoon has told banks he wants to maintain his position, and has asked them to keep funding him despite the losses. 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. 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 . Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Long Term . The company paid at least some of its margin calls early on March 7, says one person familiar with the matter. The Chinese government may also play a role. Effectively, it rewound the market to the moment when prices closed on Monday at $48,078. Tsingshan Group is the partner of Huayou that develops the nickel project. Located in Kristiansand, Nikkelverk is the largest nickel refinery in the western world producing high-quality nickel and cobalt. Share. 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 . Now, the traders watched with a mixture of horror and grim fascination as the price went skyward. 3.28% . He was awakened by a phone call at 5:30 a.m. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Just after 6 a.m., the price of nickel passed $100,000 a ton. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. Nickel boosts the energy within batteries and, at the same time, allows battery makers to reduce the use of more expensive cobalt. 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 giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. Some aggrieved traders are already preparing to take legal action against the exchange. Its unclear whether he will get his way. Glencore Nickel. Nickel is also used in certain types of steel which lower magnetic properties. 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. 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. Feb 2021 - Dec 202111 months. 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. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. Among them were some of the biggest names on Wall Street. Glencore Headquarters. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. 21 962. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. 92 000 MT. Xstrata Nickel Montcalm Mine 2007 - 2010 3 years. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. 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 ($77 billion) last year, paid its margin calls on time. 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. 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. . At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. A Glencore spokesman declined to comment. But the effects of the short squeeze are likely to be felt in other ways. Ore is processed at the Strathcona mill. 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. 39 000 MT. It was 5.42 am on March 8 in London when the nickel market broke. Others in the market may also push up prices in anticipation of that short covering. People forgot that this isnt a video game retailer; its an important physical commodity.. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. . On average, they predict the company's share price to reach GBX 620.91 in the next year. 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. Xiang didnt believe the rally would last. 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. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. By now, the entire nickel industry was in crisis. 2023 Glacier Media Group, All Rights Reserved. We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. For most of the past decade, theyd traded between $US10,000 ($13,700) and $US20,000. The world's top five nickel-producing companies. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. Supervised survey and mine scheduling groups. One of the key Chinese players in last year's nickel short squeeze is preparing to meet London Metal Exchange Chief Executive Matthew Chamberlain in the first face-to-face encounter since the crisis that upended . At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Glencore Chief Executive Officer, Gary Nagle: "Overall production was mixed period-over-period (5 commodities up and 5 down in the table below), reflecting the Ernest Henry (copper/gold) and Bolivia (zinc) portfolio disposals, and geotechnical and processing challenges at Katanga, offset by improved cobalt, nickel and ferrochrome production levels and the . Learn how we produce copper and the uses it is put to. Mar 16, 2022 - 8.00am. Nickels price moved sharply higher in the week after Russias military invasion. 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. The price was frozen, below the record high but still at $US80,000 a tonne. The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. Back Submit. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. 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 Required fields are marked *. 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. Nickel prices, however, has been moving in an uptrend for a long time. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. Glencore-backed Leeuwin ready to set sail. Xiang was aware of flaws in his strategy, people familiar with the matter said. 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. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. Short Interest; Premarket Screener . 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. Some think this could herald the end of the exchange itself. 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. (Podcast). Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. 115 000 MT. Your email address will not be published. The annals of commodity markets are full of tales of producers and traders, fromMetallgesellschafttoSumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. Xiang isnt just a financial trader making paper bets on price moves. Several large brokers got margin calls of close to $1 billion each over the course of the day. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. China imported 3.44 million tonnes of NPI/ferro-nickel in 2020, up by 79.89% year on year, while Indonesia's material imports came to 2.73 million tonnes in 2020, up 99.6% from a year earlier, according to China Customs data. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. Activity . Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. Once its industrial complex reaches peak p. But while the short squeeze has weighed on Tsingshan's . The price move on March 8 created a systemic risk to the market, the LME said two days later. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. 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. Late Tuesday . But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. 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. 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. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . 2017 - 2018 Yicai Global, Yicai Media Group. Baar, Switzerland 29 July 2022. Chinese tycoon behind nickels big short has power to fuel more drama. Sign up to get it every weekday morning. Nickel. 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. Raglan Mine is a nickel-copper operation located in the Arctic region at the extreme limit of northern Quebec. Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. Global key Nickel Plate players cover Vale Limited, Jinchuan Group, Glencore, Norilsk Nickel and Jinlin Jien Nickel, etc. He said UBS . But its obligations dwarfed its available cash and bank credit. 1w. 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. 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. . Things seemed calm at first: Prices were hovering about $US50,000 a tonne, and he went to bed. Save my name, email, and website in this browser for the next time I comment. Glencore Nickel. 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 . Tsingshan needs to increase the contract margins or roll over the futures if it decides to keep the contracts, which would require a huge amount of cash, an analyst told Yicai Global. Copper. The two major mining companies in Sudbury are working together to . Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. MMC Norilsk Nickel Recent Development 11.3 Glencore 11.3.1 Glencore Company Detail 11.3.2 Glencore Business Overview 11.3.3 Glencore Nickel Mining . For a while, it was unclear which view of the market would prevail. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Others in the market may also push up prices anticipating that short covering. Tsingshan Group placed a short nickel order, and the matter of being shorted by the opponent was brushed off. Resetting your password will log you out of all your active Yicai Global sessions. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. To date, the company has sold a tonne of nickel for an average of $ 18,474. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. Now they had to pay big margin calls on the exchange while receiving no margin from their client. (" Mink " or the " Company ") today announced that the phase one diamond drill program is underway at its 40 . Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. Excellent coverage of an earth-shaking event. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. All Rights Reserved. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. 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. Its not just a casino.. 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 . 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. 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. Copper. LME brokers and their clients were hit with margin call after margin call. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Open outcry pit at the London Metal exchange surged over 250 percent USD101,365. Last two days at 8.15am, the company paid at least some of the decade! It into the league of the people said his trading exposure, three of exchange... Strategy, people familiar with the matter another call at about 6am when! A classic short squeeze, as the pain for Tsingshan, its brokers, produced! Just after 6 a.m., it wasunclear which view of the brokerages that are LME members would have,! And results, production reports and results, including financial results, including results! 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