Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. Vale - 208,000 metric tonnes. The total volume mined by Glencore in 2021 fell compared to 2020, in part due to supply chain problems and the closure of some mines. 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. 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. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. 20 kt/a nickel in concentrate) and Fraser Morgan (ca. 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. 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. 2023 Glacier Media Group, All Rights Reserved. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered, in a bind. However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . Save my name, email, and website in this browser for the next time I comment. Tsingshan started building its short position last year in part because Xiang expected a nascent surge in nickel prices to fade, according to people familiar with the matter. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. this week's short squeeze is nonetheless likely to push . Follow the topics, people and companies that matter to you. Glencore Nikkelverk AS has a modern and complex processing system. It now operates large nickel production facilities in China and Indonesia. LME brokers and their clients were hit with margin call after margin call. Now they had to pay big margin calls on the exchange while receiving no margin from their client. 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. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. (Podcast). Nickel prices usually move a few hundred dollars per tonne in a day. Explore the extraordinary journey of nickel, of nickel sold via our marketing business. Xiang isnt just a financial trader making paper bets on price moves. Xiang isnt just a financial trader making paper bets on price moves. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. 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. 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. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. 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. View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. Related Article: Nickel price spike purely financial but Tsingshan effect could linger. 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. Having capacity but no inventory puts Tsingshan at a disadvantage, he said. Iquique Chile Falconbridge . Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. The difference is that nickel is a commodity that touches the entire global economy. 92 132 MT. It was 5.42 am on March 8 in London when the nickel market broke. 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. . Your email address will not be published. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. Like Comment Share. Others took to social media. The price move on March 8 created a systemic risk to the market, the LME said two days later. 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. Glencore Nickel. The LMEs special committee held another call at about 6am. The spike was driven in large part by a short squeeze centred on Chinese tycoon Xiang Guangda, who had amassed a big wager that nickel prices would fall through his company Tsingshan Holding Group. (via NewsDirect) Helix Resources Ltd (ASX:HLX) MD Mike Rosenstreich tells Proactive the company is ready to spin out its nickel and cobalt interests in the prolific Cobar Basin of NSW into a special-purpose vehicle aimed at maximising value for shareholders. The fallout was immediate. It was 5.42 am on March 8 in London when the nickel market broke. Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. Why? China's manufacturing activity expanded at the fastest pace in more than a decade in February. 2017 - 2018 Yicai Global, Yicai Media Group. Xiangs short position has now racked upbillions of dollars in losses. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Learn how we produce copper and the uses it is put to. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Login. At 1 a.m. on Tuesday, the market opened. Report summary. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. Vale is the world's largest producer of nickel, one of the most versatile metals in existence. He said UBS . The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. 5 000 MT. Just after 6 a.m., the price of nickel passed $100,000 a ton. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. ESC Mali school of busness. 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. For the LME, the future isunclear. Yet the firm's lucrative . (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. MT. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. 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. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. Tsingshan Group is the partner of Huayou that develops the nickel project. Still, the LME has weathered numerous scandals before in its 145-year history, from a 1985 crisis in the tin market that caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than $US2 billion in losses. . Late Tuesday . Xstrata Nickel 4 years 1 month Directeur Operations Minieres et Services techniques . On this day, however, metal traders across the city were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. . 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 . We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. 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. 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. He started increasing his short position on the London Metal Exchange. Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. Including positions on the London Metal Exchange and bilateral bets with banks, Xiang still has short holdings in the region of 150,000 tons, the people said. Baar, Switzerland 29 July 2022. 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