Pleased to report an extremely strong year for the Nickel Industries and the. The difference is that nickel is a commodity that touches the entire global economy. It's been under growing pressure to meet the payments in recent days, the. Tsingshan, the world's largest stainless steel producer, is rumoured to have built a big short position in nickel before a 250% rally in [] For the LME, the future isunclear. 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 a move that could help calm markets.. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. Capital Com Online Investments Ltd is a limited liability company with company number 209236B. The nickel market was anything but calm. It should be mentioned that nickel had already rallied to $25,000 in January before easing off by the end of the month. He started increasing his short position on the London Metal Exchange. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. People forgot that this isnt a video game retailer; its an important physical commodity.. The extra charge kicks in at close of business on Tuesday. ), by sales channel (Direct Channel, Distribution Channel), by player (Shandong Xinhai Technology, Tsingshan Holding Group, Eramet, Linyi Yichen Alloy, Jiangsu Delong Nickel Industry . Despite that, reserves that can be economically mined are limited. Bloomberg News' Joe Deaux reports. A short position is created when a trader sells a security he does not own, with the intention of repurchasing it later at a lower price. 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. Keep in mind that past performance is no guarantee of future returns. It had sold nickel forward on the markets, betting on the price going down, not up. The limits also meant that those buyers seeking to unwind their positions had to join a long queue of sellers waiting to complete their transactions. Even at that level, clients of LME brokers had failed to pay some US$500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. The big fear was that Tsingshan would struggle to make margin calls with its bankers, potentially facing billions of dollars in losses. Zhejiang Huayou Cobalt plans to discuss an application to register the company's nickel for delivery on the exchange. One of the sources said Tsingshan's bets on lower nickel prices had amounted to around 300,000 tonnes at an average price between $18,000 and $19,000 a tonne. read more. However, for business days 7th and 8th March, they would remain at . Tsingshan sold 200,000 ton March 2023 contracts at price of $20 per kilo. According to reports, Tsingshan Group plans to produce 850,000 tons of nickel in 2022, an increase of 40% compared with the production of nearly 600,000 tons in 2021. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Tsingshan is an excellent Chinese enterprise, and our positions and operations dont have any problems.. Distribution and use of this material are governed by A Glencore spokesman declined to comment. The Chinese government may also play a role. 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. 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. 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. 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 metals industry, financial regulators and Chinese officials rushed to resolve a crisis in Londons nickel market, which remained on ice after an ill-fated trade sparked mammoth price gains and billions of dollars of losses. But its obligations dwarfed its available cash and bank credit. Tsingshan Holding Group held the biggest short position for nickel on the LME. Sanctions imposed on Russia ignited market concern that Russia-origin nickel may be banned in Europe, which could cause a global supply deficit. The super spike was driven by holders of short positions, including Tsingshan and its brokers, rushing to close them out. The price spike left Tsingshan exposed to $8 billion USD of trading losses whilst struggling to meet their margin calls. Some have also warned that much of the chaos in the nickel market may not be over yet. 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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. Singapore | A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after this weeks unprecedented price spike, according to people familiar with the matter. read more. 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. Is the US Finally Warming to the Possibility of Creating a CBDC? Nickel prices trading on the London Metal Exchange (LME) has fallen significantly over the past few months as restrictions cooled the turbulent market, pulling the metal down from its record high of above $100,000 a tonne on 8 March. Weve received a lot of phone calls today, he said. Prices for the metal, used in stainless steel and electric vehicle batteries, were last in that range in December. 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Xiang Guangda in 2017. Contact us | The price move on March 8 created a systemic risk to the market, the LME said two days later. To limit price volatility the LME imposed daily upper and lower price limits of 15% for all its physically delivered metals. In recent days, Tsingshan has been under growing pressure from its brokers to meet margin calls on that position - a market dynamic which has helped to drive prices ever higher. 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. Mr Xiang began building the short position in part because he wanted to hedge rising output, but also because he believed the rally in nickel prices would fade this year. Pada titik ini, posisi short Tsingshan dibekukan. The price continued to climb higher as one of the world's largest nickel producers, Russia decided to invade Ukraine. 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. The Wall Street Journal, which previously reported the talks, also said Standard Chartered (STAN.L) and BNP Paribas (BNPP.PA) were among the banks looking to reach agreement. As such, if Tsingshan can weather the losses on its LME positions, the higher prices could yet benefit its core business of producing nickel and stainless steel. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. Based on the close on Friday night at $29,130, the LME were raising initial margins to a prudent 7.72% of the contract value. Today, Tsingshan is the biggest nickel producer in the world, accounting for around 20% of the global market. The tycoon whose big short bet on nickel helped trigger one of the most dramatic price spikes in history has told his banks and brokers that he doesnt intend to reduce his position, according to people familiar with the matter. 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. If the market moves against those positions, they receive a margin call requesting further funds and if they fail to pay, they can be forced to close their position. 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. Given our role in supervising the LME, we have been, and will continue to be, taking a very close interest in how it is managing and responding to the issues, the FCA confirmed in late March. 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. It granted extra time on March 7th to CCBI Global, a Chinese broker for Tsingshan that is a member of the LME, to raise funds from its state-owned parent, China Construction Bank, to cover. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. For Xiangs big short position, that was painful. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Our fundamental responsibility is market stability, he told Bloomberg TV. The fallout was immediate. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. But recent events have certainly injected a dose of volatility into the market. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Copyright | Bloomberg: Balance of Power focuses on the politics and policiesbeing shaped by the agenda of President Biden's administration. The Companys registered office is at Bahamas Financial Centre, 3rd Floor, Shirley and Charlotte Street, P.O. A sharp surge in nickel prices triggered margin call fears at the London Metal Exchange which suspended trading after prices doubled in hours. This is a fee deposit with a counterparty (often the brokers or exchange) to cover some of the credit risk undertaken to take a short position. Assessing the Incremental Costs of Regulation and Supervision Faced by EU Banks Compared to Their US Peers, Interview with Mr. lvaro Saboro, Chief Executive Officer, Grupo Financiero BCT. ), by application (Stainless Steel Industry, Electronics Industry, etc. 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. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . Nickel prices usually move a few hundred dollars per ton in a day. Nickel rocketed to a record high above $US100,000 a tonne on Tuesday, driven in part by Tsingshan and its brokers activity, before trading was suspended. Q. .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. While Mark Thompson, executive vice-chairman at mining-development company Tungsten West, tweeted: The LME is now very likely going to die a slow, self-inflicted death through the loss of confidence in it and its products.. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. a practice known in financial markets as margin calls. See here for a complete list of exchanges and delays. He was awakened by a phone call at 5:30 a.m. The price was frozen, below the record high but still at US$80,000 a ton. Why? Tsingshan's 2022 nickel equivalent output is . While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. (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 . Following Russias invasion of Ukraine on 24 February, the three-month nickel contract rocketed to more than $100,000/tonne on 8 March, hitting an intra-day high at $101,365 on the same day. The LME suspended nickel trading in the early trading session on March 8 after prices more than doubled, breaching $100,000/mt mark and briefly reaching a record high of $101,365/mt. Is the Strength of Big Tech Regulation Sufficient at Present? And once again, this short squeeze racked up billions in losses for those involved. A short squeeze is a market condition caused by massive short positions. Help using this website - Accessibility statement. Now they had to pay big margin calls on the exchange while receiving no margin from their client. In response to the crisis, the LME suspended nickel trading on 8 March and cancelled all trades executed on or after 00:00 UK time on 8 March 2022 in the inter-office market and on LMEselect (LME online trading platform) until further notice.. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. 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. To gauge the magnitude of the problem, an unnamed source familiar with the trades told the, Nickel trading did resume on March 16, but the exchanges electronic trading system malfunctioned on several occasions after resumption, while preset daily limits on price movements (5 percent on the 16, The LME has been asleep at the wheel, according to Andrew Mitchell, director of nickel research at consulting firm Wood Mackenzie, who spoke to the, But the LME has defended its actions, arguing that the decisions it took were made with full regard to regulatory due process and in the interests of the market as a whole, according to a spokesman for the exchange, who spoke to UK financial-news publication, Manuel A. Muoz European Central Bank (ECB), Miguel Moreno Tripp EGADE Business School | Crowe Global, Flix Villatoro Universidad Adolfo Ibez Business School, Kenneth D. Simonson Associated General Contractors of America (AGC), Dalia A. Kader Commercial International Bank (CIB), Davi Ferreira Veronese University of So Paulo, Maria Paula Bertran University of So Paulo, Thanos Andrikopoulos University of Hull, Tim Johnson JB Super Yachts | TJB Private Travel. He was awakened by a phone call at about 6 a.m. Now they recognized that they had pay. Participants expect nickel prices to come back down once the crisis around Xiangs has. Of phone calls today, Tsingshan is the Strength of big Tech Regulation Sufficient at Present a dose volatility... Volatility the LME to manage all your complex and ever-expanding tax and compliance needs discuss an application to register company! Events have certainly injected a dose of volatility into the market, the LME weve received a of! Industries and the an important physical commodity nickel for delivery on the London Metal Exchange, this short squeeze up... Make margin calls on the Exchange the price spike left Tsingshan exposed $! 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