China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. . Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. 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. Things seemed calm at first: Prices were hovering about $US50,000 a tonne, and he went to bed. At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. 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. 1w. 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 . A Glencore spokesman declined to comment. He was awakened by a phone call at 5:30 a.m. But the effects of the short squeeze are likely to be felt in other ways. 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. Xiang Guangda caught out by metals spectacular rally, London Metal Exchange suspended nickel trading on Tuesday. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. Feb 2021 - Dec 202111 months. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Some think this could herald the end of the exchange itself. 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. 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. 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 . Xstrata Nickel Montcalm Mine 2007 - 2010 3 years. Now they recognised that they had to suspend trading. The price move on March 8 created a systemic risk to the market, the LME said two days later. 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. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. 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. Senior Mine Engineer. Provided short/mid/long/strategic schedules using Deswik. 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. 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 . The price was frozen, below the record high but still at $80,000 a ton. 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. Nickels price moved sharply higher in the week after Russias invasion. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. The fallout was immediate. Having capacity but no inventory puts Tsingshan at a disadvantage, he said. Last modified on Wed 15 Feb 2023 06.23 EST. You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. Short Term. We had a frenzy based on speculation that accelerated on Monday and Tuesday. Enter the code below to reset your password. 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. But while the short squeeze has weighed on Tsingshan's . Nickel makes steel corrosion-resistant and plays an essential role in our modern world. Its unclear whether he will get his way. Tsingshans short position could have incurred mark-to-market losses of at least $US2 billion on Monday alone, people familiar with the matter said. 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. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. Your email address will not be published. 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. Canada Nickel Company Inc. $1.24. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. Nickel is a raw material that is characterized by exceptional resistance and special properties, thanks to which it has many applications. We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. Coal Department. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Including positions on the London Metal Exchange and bilateral bets with banks, Xiang still has short holdings in the region of 150,000 tonnes, the people said. Even at that level, clients of LME brokers had failed to pay some $500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. They had offset their deals with Tsingshan by placing their own short positions on the LME. Stephen Engle reports. Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. Neither party seems very keen on this idea, however. 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. Others in the market may also push up prices anticipating that short covering. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . 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. Learn how we produce copper and the uses it is put to. It was 5.42 am on March 8 in London when the nickel market broke. 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. Production 2019. 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. Your password has been changed successfully. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Among them were some of the biggest names on Wall Street. 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. It traded briefly above $100,000 a ton early on Tuesday. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . For participants in commodities exchanges, a price rally is not necessarily good news. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. 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 . Harjavalta nickel smelter in Finland (Credit: Boliden). A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. Please try again later. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. This type is different from the mainstream ferro-nickel and nickel pig iron. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. Share. The head of one London metals brokerage recalls feeling sick as he watched the moves, realizing what the spike in prices would mean for his company, the market, and the global metals industry. Short Interest; Premarket Screener . Sep 2021 - Present1 year 5 months. . 2023 Glacier Media Group, All Rights Reserved. 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. Xiang didnt believe the rally would last. 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. Some aggrieved traders are already preparing to take legal action against the exchange. Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Today, in addition to its electronic market, its one of the last exchanges where brokers still gather in person to yell orders at one another for part of the day. Xiang isnt just a financial trader making paper bets on price moves. articles a month for anyone to read, even non-subscribers! He said UBS . Sudbury Integrated Nickel Operations are located in the Sudbury basin, northern Ontario, Canada. The latest price was A$0.04 (25-minute delay). Credit: INF News.com. 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. 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. It decided to cancel all the trades that took place on Tuesday morning some $US3.9 billion of them. Others in the market may also push up prices in anticipation of that short covering. In terms of revenue, the global largest two companies occupy a share . 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. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. 6W - 9M. Complete Glencore PLC ADR stock information by Barron's. View real-time GLNCY stock price and news, along with industry-best analysis. 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. (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. 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. 02 March 2023. . Strong passwords include numbers,letters,and special characters. 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. Because nickel resists high temperatures, it is used in special steel and superalloys intended for aircraft engines, among other applications. Save my name, email, and website in this browser for the next time I comment. . Xiang Guangda, the billionaire owner of Tsingshan Holding Group. Undeterred, the Chinese tycoon has told banks he wants to maintain his position, and has asked them to keep funding him despite the losses. Loans this week, Xiang Guangda, who is also the Wenshou-based companys founder, told Global! 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