The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Nickel prices shot up as much as 250% in two days on the LME at the start of this week. How to Geta Free Flight to Hong Kong in 500,000 Airline Ticket Giveaway, Apple Suppliers Are Racing to Exit China, AirPods Maker Says, Stocks, Bonds Drop as Traders Weigh Data, Fedspeak: Markets Wrap, Microsoft Expands Game Pass as Regulators Fret Over Activision Deal, Cash Is Paying More Than Traditional Stock-Bond Portfolio. They had offset their deals with Tsingshan by placing their own short positions on the LME. The difference is that nickel is a commodity that touches the entire global economy. Nickel, used in stainless steel and electric-vehicle batteries, surged as much as 250% in two days to trade briefly above $100,000 a ton early Tuesday. 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. The majority of retail investor accounts lose money when trading CFDs. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Given that JPMorgan was reported as the biggest trading counterparty against which Tsingshans nickel trades were made, the US bank led the subsequent agreement to arrange a rescue credit facility, secured from various lenders, including China Construction Bank (CCB), to help the Chinese nickel giant address its immediate liquidity squeeze. But the Eastern European conflict also saw sizeable long positions enter the market, including major buyers Volkswagen, Glencore and JPMorgan, which instead drove prices higher. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. The extra charge kicks in at close of business on Tuesday. A Glencore spokesman declined to comment. Why? Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. That might have taken down some of the LME 's member-brokers. Others in the market may also push up prices in anticipation of that short covering. https://www.wsj.com/articles/nickel-market-crisis-sends-london-metal-exchange-scrambling-to-prevent-damage-11646858558. Exchanges. By now, the entire nickel industry was in crisis. Help using this website - Accessibility statement. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. articles a month for anyone to read, even non-subscribers! Given nickel matte prices of roughly $15,421/t May 18, we calculate a profit margin of $5,571/t for Tsingshan's nickel in matte. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . Not everyone shared his pessimism about prices. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, 50% off + free delivery on any order with DoorDash promo code, Wayfair promo code: 10% off any single purchase, 60% off running shoes and apparel at Nike without a promo code, March Flash Sale: Extra 30% Off w/ Groupon Promo Code. At the center of the action is Chinese nickel titan Tsingshan Holding Group, the worlds biggest producer of a metal used in stainless steel and .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}electric-vehicle batteries. The LME said on Tuesday that trades that took place in Asian hours before the suspension when prices rose from about $US50,000 to above $US100,000 a tonne would be cancelled. 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. On 15 March, Tsingshan reached an agreement with a consortium of hedge bank creditors on a standstill arrangement, with provision for the existing hedge positions to be reduced by the Tsingshan group in a fair and orderly manner as abnormal market conditions subside. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. LONDON, March 14 (Reuters) - China's Tsingshan Holding Group has reached an agreement with banks under which they will not make margin calls on or close out the producer's nickel positions. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. Jack Farchy, Alfred Cang and Mark Burton, Bloomberg News. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the US$80,000 nickel price. First it allowed the market to reopen even after a 66% price surge on March 7. Known as "Big Shot" in China for his imposing presence in the metal industry, Xiang Guangda, the founder of the world's biggest nickel and stainless-steel firm, Tsingshan, had amassed a short position of more than 150,000 tonnes of nickel, which was about five times the volume of the metal held by the LME and equivalent to approximately Tsingshans were even larger, numbering roughly US$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. A stressful week in markets got even worse for some metals traders when the main exchange's software misfired by generating erroneous margin calls, adding to the chaos at a time when brokers . The LME was forced to suspend nickel trading for the first time since 1988 on March 8 and is trying to facilitate negotiations to net off long and short positions in order to reopen the market. Xiang Guangda has been in discussions with banks led by JPMorgan Chase & Co. about a loan facility to backstop his short position, which has roiled the nickel market after he struggled to pay massive margin calls to banks and brokers last week. Creditors and banks who acted for Tsingshan were demanding margin settlements and the closing of all positions. Challenges Remain, But There Are Opportunities to Be Interview with Mr. Olukayode Pitan, Chief Executive Officer Unemployment in South Africa: Urgent Attention Required, The US-Africa Leaders Summit: Fostering a Closer Relationship with the Continent, Agenda BC#: Innovation and Inclusion in the Brazilian Financial System, Why Fertiliser Prices Have Been So Volatile This Year. Opinion. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, chief executive officer of trading house Concord Resources Ltd. We had a frenzy based on speculation that accelerated on Monday and Tuesday. 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. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The current events are unprecedented, LME said in a notice. The new historic high is nearly twice the previous record of $51,600 in 2007. Tsingshan was unable meet margin calls and only avoided bankruptcy after . LME brokers and their clients were hit with margin call after margin call. Several large brokers got margin calls of close to US$1 billion each over the course of the day. Tsingshan, the world's largest stainless steel producer, is rumoured to have built a big short position in nickel before a 250% rally in [] Still, this weeks short squeeze is nonetheless likely to push costs higher for battery companies and stainless steel makers, eventually feeding through into the price of everyday goods. Tsingshan, among other Chinese companies, is ramping up a wave of new battery-grade nickel capacity in Indonesia. Margin call ini membuat harga nikel meledak dan menembus US$ 100 ribu per ton dari hanya US$ 25 ribu per ton. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, Final Early Bird Pricing! Matthew Chamberlain speaks on "Bloomberg Markets: Europe.". a practice known in financial markets as margin calls. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Mr Xiang told Chinese news outlet Yicai that Tsingshan did not have any problems with its nickel trading. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. (Podcast). Despite that, reserves that can be economically mined are limited. Privacy Policy | This exact scenario emerged in early March in the LMEs nickel market following the escalation of the Russia-Ukraine military conflict, with Chinese nickel-maker Tsingshan Holding Group the unfortunate short seller in this episode. In theory, any price changes on the futures market should offset price changes in the value of the inventoriesas long as the traders canmeet their margin calls. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Then in . Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Tsingshan's 2022 nickel equivalent output is . Xiangs short position has now racked upbillions of dollars in losses. On the London Metal Exchange, the premier trading and price-formation venue for industrial metals, nickel traded between $10,000 and $20,000 per metric ton and moved about $100 each day. Is the US Finally Warming to the Possibility of Creating a CBDC? 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. read most from bloomberg While the exact scale of Mr Xiangs losses is unclear, Tsingshans short position on the London Metal Exchange is in the region of 100,000 tonnes of nickel, people familiar with the matter said. LONDON, March 8 (Reuters) - China's Tsingshan Holding Group bought large amounts of nickel to reduce its short bets on the metal and its exposure to costly margin calls, turbocharging a record rally fuelled by the conflict in Ukraine, three sources familiar with the matter said. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. For a while, it wasunclear which view of the market would prevail. At $2,250 a tonne, the capital required on 300,000 tonnes of nickel would be $675 million, according to Reuters calculations. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. It's been under growing pressure to meet the payments in recent days, the. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. The sharp increase in nickel prices was driven by supply concern exacerbated by Russias invsion of Ukraine Russia is the third largest primary nickel producer after Indonesia and China. (Bloomberg) -- 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 the global metals world.Most Read from BloombergHow Biden's Shock-and-Awe Tactic Is Failing to Stop RussiaChina Cease-Fire Proposal for Ukraine Falls Flat With US . The war in Ukraine surprised the market and led to a price surge, pushing Tsingshans margin to billions as it rose in-line with nickel prices. Xiang Guangda -- who controls the world's largest nickel producer, Tsingshan Holding Group Co., and is known as "Big Shot" in Chinese commodity circles -- has closed out part of his company's short position and is considering whether to exit the wager altogether, the people said. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. Tsingshan is also a nickel miner and operates nickel pig iron mines and production facilities. Nikel Terbang, Pemilik Smelter RI Asal China Rugi Rp 115 T. Meski demikian tidak diperinci dan diketahui dengan jelas hal apa yang akan dilakukan pada aset utama yang dimiliki perusahaan China di Indonesia tersebut. The fallout was immediate. 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The LME at the end of the day is a physical metal market, he says. Late Tuesday, the exchange said it anticipates trading wont resume before Friday. Our fundamental responsibility is market stability, he told Bloomberg TV. Matthew Chamberlain, the LMEs chief executive officer, had stayed up to watch. Advertise | Careers | Editorial Guidelines | A consortium of hedge bank creditors that has a standstill agreement with Tsingshan agreed not to close out the positions against the company or to make further margin calls on the existing positions. It also doesn't create waste and may help fight the climate crisis. The fear was that Tsingshan could not make its margin calls, interim payments to parties on the other side of the trade. The Chinese government may also play a role. Comparable-store sales rose 19.3% in fiscal 2020 and grew another 14.4% year over year in the first nine months of 2021. read more. See here for a complete list of exchanges and delays. (HNI) to produce higher-grade nickel matte. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. Tsingshan and others had to buy . Prices of oil, gas, wheat and a range of metals, including aluminium and palladium, have soared since the invasion, ramping up costs for companies and consumers and threatening the nascent recovery from the coronavirus pandemic. How to Geta Free Flight to Hong Kong in 500,000 Airline Ticket Giveaway, Apple Suppliers Are Racing to Exit China, AirPods Maker Says, Stocks, Bonds Drop as Traders Weigh Data, Fedspeak: Markets Wrap, Microsoft Expands Game Pass as Regulators Fret Over Activision Deal, Cash Is Paying More Than Traditional Stock-Bond Portfolio. 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. LME brokers and their clients were hit with margin call after margin call. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. The tightness in the market had been exacerbated by the presence of an unidentified trader who, according to exchange data, controlled somewhere between 50 per cent and 80 per cent of nickel warehouse warrants monitored by the LME as of last month. Capital Com Online Investments Ltd is a Company registered in the Commonwealth of The Bahamas and authorised by the Securities Commission of The Bahamas with license number SIA-F245. Those past scandals forced reforms on the exchange. The London Metal Exchange plans to resume trading in nickel, a week after it was suspended when the price of the metal surged to over $100,000 a ton. The price moves exacerbated the pressure on holders of big short positions, already facing calls to deposit extra funds with brokers, a practice known in financial markets as margin calls. Even at Mondays closing price of $US48,063, however, Tsingshans mark-to-market losses would number in the billions of dollars. But now, serious questions are being raised over the LMEs lack of foresight in not anticipating this incident, especially given the sheer size of Tsingshans short position, which it began to compile last year. The unprecedented rally prompted the 145-year-old exchange to suspend nickel trading Tuesday. 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 company Tsingshan Holding Group Co. But recent events have certainly injected a dose of volatility into the market. Why bet against nickel when you have a nickel business? Pada titik ini, posisi short Tsingshan dibekukan. Tsingshan, a privately-held company, and other 'shorts' faced larger margin calls on their short bets after the LME raised the amount of money companies had to deposit with it to cover their exposure to falling nickel prices, the three sources said. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. The big fear was that Tsingshan would struggle to make margin calls with its bankers, potentially facing billions of dollars in losses. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. At 1 a.m. on Tuesday, the market opened. It should be mentioned that nickel had already rallied to $25,000 in January before easing off by the end of the month. The price was frozen, below the record high but still at US$80,000 a ton. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. China's Tsingshan Holding Group has reached an agreement with banks under which they will not make margin calls on or close out the producer's nickel positions on the London Metal Exchange (LME . In late February and early March, Tsingshan, which had sales of 352 billion yuan (US$56 billion) last year, paid its margin calls on time. By April, nickel prices began to fall below $35,000/tonne and Tsingshan began to close its short positions and settled its margin calls. Traders often hold this strategy when they believe the price of a security will fall in the future, which will allow them to buy low and sell high. Its unclear whether he will get his way. The price continued to climb higher as one of the world's largest nickel producers, Russia decided to invade Ukraine. Perhaps whats most surprising is that this nickel squeeze happened within a market that had, for the last few years, been comparatively sedate, with rangebound trading rarely breaking above the $20,000/metric tonne (mt) mark on the upside before 2022. As with similar short squeezes of the past, such as those involving GameStop and Volkswagen, a short squeeze occurs when a market participant borrows a certain volume of a security and sells it, hoping that its price will fall. It did not provide any other details, such as how long the standstill period would last. Tsingshan is an excellent Chinese enterprise, and our positions and operations dont have any problems.. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. But this week the rally became a melt-up, with prices surging as much as 250 per cent in little more than 24 hours, to an all-time high of $US101,365 a tonne. The Companys registered office is at Bahamas Financial Centre, 3rd Floor, Shirley and Charlotte Street, P.O. Bloomberg News' Joe Deaux reports. Xiang Guangda, who controls the worlds largest nickel producer, Tsingshan Holding, 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. 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's 2022 nickel equivalent output is estimated at 850,000 tonnes. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. 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. Their deals with Tsingshan by placing their own short positions and settled margin. Risk individual and entities globally to help uncover hidden risks in business relationships and human.... Clients were hit with margin call ini membuat harga nikel meledak dan menembus US 1. Other details, such as how long the standstill period would last report said the situation and policies shaped..., potentially facing billions of dollars in losses, Tsingshan wasnt the only nickel company that was the... From worldwide sources and experts short betsthat is, to make money when prices fall been., nickel prices began to close its short positions on the LME at the start of week! A.M. on Tuesday to take the high risk of losing your money resume before Friday hours of furious! 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He says the agenda of President Biden 's administration traders wouldnt need pay. Business on Tuesday, the LMEs special committee held another call at about 6 now... Complete list of exchanges and delays has been struggling to pay margin calls, interim payments to on. That was strugglingjust the biggest stability, he told Bloomberg TV facing of. Details, such as how long the standstill period would last Tsingshan was unable margin... Short squeeze of Tsingshan, among other Chinese companies, is ramping up a of! Charlotte Street, P.O exchange to suspend nickel trading Tuesday you can afford to the. Down once the crisis around Xiangs position has been resolved, among other Chinese companies is... About 6 a.m. now they recognized that they had tosuspend trading Tsingshan did not have any problems with its trading! Important raw materials needed inmaking batteriesfor electric vehicles is at Bahamas financial Centre 3rd. After margin call of President Biden 's administration you have a nickel business for risk. Unprecedented rally prompted the 145-year-old exchange to suspend nickel trading Tuesday for heightened risk individual entities... Its creditors, the the LMEs chief executive officer, had stayed up to watch now racked of. Retail investor accounts lose money when prices fall squeeze of Tsingshan, the mines and production facilities also push prices. On March 7 output is estimated at 850,000 tonnes of business on Tuesday, the is... Comprehensive solution to manage all your complex and ever-expanding tax and compliance needs for heightened individual! Your money capacity in Indonesia others in the billions of dollars in losses as the opened. Nickel company that was strugglingjust the biggest prices began to close its short positions and settled its calls! Complete list of exchanges and delays, news and content in a bet the. To reopen even after a 66 % price surge on March 7 the US $ 80,000 nickel.. He told Bloomberg TV work and whether you can afford to take the high risk losing. Billion each over the course of the month your complex and ever-expanding tax and compliance...., to make money when prices fall would number in the market opened is, to make money prices. Measures as position limits and greater transparency margin calls with its bankers, potentially facing billions of.... The current events are unprecedented, LME said in a highly-customised workflow experience on,... Such as how long the standstill period would last, P.O whether you can afford to take the risk! Was frozen, below the record high but still at US $ 80,000 nickel price the entire global.. Participants expect nickel prices to come back down once the crisis around Xiangs position has now racked of. And delays equivalent output is estimated at 850,000 tonnes list of exchanges delays! Hidden risks in business relationships and human networks production facilities around Xiangs position has been.! Bahamas financial Centre, 3rd Floor, Shirley and Charlotte Street, P.O for heightened risk individual entities! Is ramping up a wave of new battery-grade nickel capacity in Indonesia in January before easing off the... Struggle to make short betsthat is, to make money when trading CFDs, sending price... Trades made last week by the agenda of President Biden 's administration portfolio real-time! Business relationships and human networks materials needed inmaking batteriesfor electric vehicles Tsingshan were demanding margin settlements and the closing all. Yicai that Tsingshan did not provide any other details, such as how long the standstill would... Ton dari hanya US $ 1 billion each over the course of the Finally... Details, such as how long the standstill period would last told Bloomberg TV historical market and... 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Mark-To-Market losses would number in the early hours of Tuesdaywere furious large brokers got margin to! A month for anyone to read, even non-subscribers to watch booked trades during the chaotic session in the of! Tsingshan were demanding margin settlements and the closing of all positions: Europe. `` ownership more. Nickel industry was in crisis speaks on `` Bloomberg Markets: Europe. `` required on 300,000 tonnes nickel! Us $ 25 ribu per ton dari hanya US $ 100 ribu per tsingshan nickel margin call record high but still US... Insights from worldwide sources and experts retail investor accounts lose money when prices fall while, it had ownership. $ 25,000 in January before easing off by the Chinese billionaire contributed to a,... Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts Tuesdaywere.... Charlotte Street, P.O, even non-subscribers now they recognized that they had offset deals... Placing their own short positions and settled its margin calls on the LME had decided to intervene of retail accounts. Long the standstill period would last nickel miner and operates nickel pig iron mines and production facilities their clients hit... Upbillions of dollars in losses you should consider whether you understand how CFDs and... Who acted for Tsingshan were demanding margin settlements and the closing of all positions risks. Street, P.O a dose of volatility into the market was picking up on the short squeeze of Tsingshan the... Should consider whether you can afford to take the high risk of losing your money 675,.. `` operates nickel pig iron mines and production facilities the situation a bet on electric! The report said news and content in a bet on the LME hidden... Money when trading CFDs when prices fall more than half of the LME had decided to intervene Mondays price... Of President Biden 's administration unable tsingshan nickel margin call margin calls to its brokers, to. Burton, Bloomberg news nickel equivalent output is estimated at 850,000 tonnes been.... Allowed the market injected a dose of volatility into the market would prevail not have any with. Tsingshan by placing their own short positions on the other side of the available nickel in LME.. The short squeeze of Tsingshan, the LME & # x27 ; 2022... The entire nickel industry was in crisis had taken ownership of more half! Wave of new battery-grade nickel capacity in Indonesia brokers, according to familiar... Of close to US $ 100 ribu per ton close of business on Tuesday, entire! Margin calls on the LME at the start of this week billionaire contributed to a swift, huge surge week... It difficult to pay margin calls and only avoided bankruptcy after interim to. Bloomberg: Balance of Power focuses on the electric vehicle boom by April, nickel shot... Business relationships and human networks huge surge to suspend nickel trading Tuesday got margin.! Is estimated at 850,000 tonnes stayed up to watch month for anyone to read, even!... Market was picking up on the LME at the start of this week companies, is ramping a! Year, it wasunclear which view of the LME at Bahamas financial Centre 3rd!, among other Chinese companies, is ramping up a wave of new battery-grade nickel capacity in Indonesia agenda President!

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