Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. 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. This report studies the Ferronickel market, covering market size for segment by type (Ferronickel (Nickel15%), Ferronickel (Nickel15-25%), etc. Tsingshan made its name producing not the highly purified plates and briquettes which are traded on the LME as Class 1 nickel, but nickel pig iron or NPI lumps of low-grade metal that can. 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. 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. Three-month nickel on the LME more than doubled to over $100,000 a ton yesterday before the LME stepped in to halt trading of the metal. Others took to social media. But its obligations dwarfed its available cash and bank credit. China's Tsingshan Holding Group has reached agreements with two companies to swap its . 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. This will allow the trader to buy the security back at a lower price, return it to the lender and hopefully pocket a handsome profit. Copyright | The LME at the end of the day is a physical metal market, he says. read more. Nickel prices usually move a few hundred dollars per ton in a day. ), by application (Stainless Steel Industry, Electronics Industry, etc. The unprecedented rally prompted the 145-year-old exchange to suspend nickel trading Tuesday. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. For non-personal use or to order multiple copies, please contact 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. 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. If you are considering investing or trading nickel, its important to do your own research. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. Some aggrieved traders are already preparing to take legal action against the exchange. A week earlier, nickel was trading around $25,000 and the price of the metal has more than quadrupled in a matter of days. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Nickel trading resumed on 16 March 2022. 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. Sanctions imposed on Russia ignited market concern that Russia-origin nickel may be banned in Europe, which could cause a global supply deficit. Tsingshan sold 200,000 ton March 2023 contracts at price of $20 per kilo. The Chinese nickel tycoon whose big short position caused chaos reached a deal with his banks to avoid further margin calls, marking a key step toward restoring stability to the market after an unprecedented squeeze. 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. 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. read more. The London nickel market has been closed since last Tuesday morning, when the exchange intervened after prices spiked as much as 250% in two days, and the standstill announced by Xiangs Tsingshan Group Holding Co. could provide the certainty needed to restart trading. For Xiangs big short position, that was painful. Continue reading your article witha WSJ subscription, Already a member? A sharp surge in nickel prices triggered margin call fears at the London Metal Exchange which suspended trading after prices doubled in hours. Indeed, Russia is the worlds third-biggest nickel producer after Indonesia and the Philippines. Capital Com is an execution-only service provider. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. Tsingshan, who pioneered the Rotary Kiln Electric Furnace (RKEF) process to produce low-cost nickel pig iron (NPI), is now the dominant player in the Indonesian NPI industry and a global leader in NPI processing technology, including having implemented the Argon Oxygen Decarburisation process which incorporates the direct hot charging of NPI into the stainless steel production process for a . 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 Holdings was founded in 1988 by Xiang Guangda in Wenzhou. The extra charge kicks in at close of business on Tuesday. https://www.wsj.com/articles/chinese-nickel-giant-tsingshan-faces-8-billion-trading-loss-as-ukraine-war-upends-market-11646765353. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Tsingshan debacle exposes weak underbelly of LME. That means it would have suffered much more than $US2 billion ($2.7 billion) of daily losses at the most extreme point of nickels surge. 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. On February 22, 2023, Yangjiang News, at the "New Track, Great Future--Qingshan S32001 Duplex Steel Channel Market Launch Conference" hosted by Qingyi Steel 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. 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. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . articles a month for anyone to read, even non-subscribers! Our fundamental responsibility is market stability, he told Bloomberg TV. By April, nickel prices began to fall below $35,000/tonne and Tsingshan began to close its short positions and settled its margin calls. The arrangement will also help the pave the way for the London Metal Exchange to restart nickel trading, they said. The LME nickel short squeeze. 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 exchange then retroactively wiped out $3.9 billion worth of transactions made before the suspension to demonstrate that nickel prices had stopped reflecting the underlying physical market. After trading was suspended Tuesday following an unprecedented surge in prices, the London Metal Exchange said it does not expect nickel trading to resume before March 11. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. The price was frozen, below the record high but still at US$80,000 a ton. At $2,250 a tonne, the capital required on 300,000 tonnes of nickel would be $675 million, according to Reuters calculations. (Podcast). The Tsingshan Holdings Group ( Chinese: , ching-shan) is a Chinese private company active in the stainless steel and nickel industry. He was awakened by a phone call at 5:30 a.m. Weda Bay is becoming a very material contributor to the cash flow of ERAMET and it's a fair view of what is the cash the Company can generate. (Bloomberg) A unit of China Construction Bank Corp was given extra time by the London Metal Exchange to pay hundreds of millions of dollars in margin calls it missed on Monday amid an unprecedented rise in nickel prices, in this case According to people familiar with . The price move on March 8 created a systemic risk to the market, the LME said two days later. Erin Jonasson. 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. The new historic high is nearly twice the previous record of $51,600 in 2007. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. Opinion. Xiang Guangda, the actual controller of Tsingshan, believes that the entry of so much nickel into the market will bring nickel prices down. The big fear was that Tsingshan would struggle to make margin calls with its bankers, potentially facing billions of dollars in losses. China scoffs at FBI claim that Wuhan lab leak likely caused COVID pandemic, China's abrupt reopening sparks student accommodation crisis in Australia, Reporting by Pratima Desai; additional reporting by Sinead Cruise and Eric Onstad in London; Editing by Megan Davies, Jan Harvey, Tim Ahmann and Cynthia Osterman, U.S. House panel approves bill giving Biden power to ban TikTok, Russia tries to close ring on Bakhmut as Ukrainians mount 'furious resistance', Wall St falls as yields rally on hawkish comments, data, Erdogan indicates Turkey elections to be in May, three months after quake, Massachusetts U.S. Attorney taps ex-DOJ watchdog to defend her in ethics probe, Another BoE rate rise isn't inevitable, Bailey says, China's Xi cements ties with Belarus leader against background of Ukraine war, Russia's Lavrov meets Indian counterpart ahead of G20 talks, Exclusive news, data and analytics for financial market professionals. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. Traders must deposit cash,. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. The Companys registered office is at Bahamas Financial Centre, 3rd Floor, Shirley and Charlotte Street, P.O. The fear was that Tsingshan could not make its margin calls, interim payments to parties on the other side of the trade. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. President Tayyip Erdogan indicated on Wednesday that elections will be held on May 14, sticking to his previous plan for the vote with a date just over three months after a devastating earthquake killed more than 45,000 people in Turkey. Tsingshan's 2022 nickel equivalent output is . One of Tsingshans brokers, CCBI Global Markets, also failed to pay hundreds of millions of dollars in margin calls on its nickel positions on March 7. 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. Then on March 7, nickel's price began its parabolic. And once again, this short squeeze racked up billions in losses for those involved. But the effects of the short squeeze are likely to be felt in other ways. But according to Bloomberg, the LME refrained from putting it into default, which allowed the broker to settle the margin calls the following day after several clients, including Tsingshan, received loans to cover their positions. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. Tsingshan's difficulties in paying its margin calls, and the company's ongoing bailout negotiations, have put its banks and brokers in a bind, as they have had to make hefty margin calls of their own at the LME to cover their short positions on the exchange. Nickel short interest was created by Tsingshan. 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. 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. Imposed on Russia ignited market concern that Russia-origin nickel may be banned in Europe, which could a. March 7, nickel & # x27 ; s price began its parabolic portion of the trade if are... Shirley and Charlotte Street, P.O 200,000 ton March 2023 contracts at price of $ 51,600 in 2007 credit... 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