The LME nickel short squeeze was created by Chinese stainless-steel producer Tsingshan as it built up massive short positions for the metal, and its margin calls spike in-line with the surge in nickel prices in March. The LME nickel short squeeze. 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. Our Standards: The Thomson Reuters Trust Principles. 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. Chinese metal giant Tsingshan Holding Group Ltd., caught in a massive short squeeze amid an unprecedented rally in the price of nickel, reached a deal with banks to avoid further margin calls.. Tsingshan, one of the world's biggest nickel and stainless steel producers, worked out a standstill arrangement with a consortium of hedge bank creditors that will allow the company to continue . 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. However, the short position holders have to pay a margin. The price spike left Tsingshan exposed to $8 billion USD of trading losses whilst struggling to meet their margin calls. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. Just over a year after the historic short squeeze involving video-game retailer GameStop sent shockwaves around the financial world, a similar episode broke out in early March, this time on the London Metal Exchanges (LME) nickel market. 3.1 What is the margin call to Tsingshan? Its nickel matte production in Indonesia is nearly 8,000 tonnes per month, according to the Shanghai Securities News. 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. 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. At 1 a.m. on Tuesday, the market opened. Nevertheless, the short squeeze did trigger a whopping $8 billion margin call on Guangda. 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. Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). Are you considering whether or not to trade nickel or want to learn more about the market? Nickel short interest was created by Tsingshan. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Our fundamental responsibility is market stability, he told Bloomberg TV. Join the 500.000+ traders worldwide that chose to trade with Capital.com, Also you can contact us: 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. For non-personal use or to order multiple copies, please contact 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. Indeed, reports suggest that a number of investors are now preparing lawsuits, while the LMEs regulator, the Financial Conduct Authority (FCA), is expected to investigate the incident. 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 Morowali park mainly produces nickel pig iron for stainless steel. It also doesn't create waste and may help fight the climate crisis. 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. Until yesterday, it appeared that a bailout plan for Chinese stainless steel titan Tsingshan Holding Group owned by "Big Shot" Xiang Guangda (and which was facing an $8 billion nickel margin call following the explosive surge in Nickel prices which briefly soared above $100,000/ton up 4x in just a few days, or would be if the Hong Kong-owned LME ever reopened Nickel trading) was coming along . Mr Xiang told Chinese news outlet Yicai that Tsingshan did not have any problems with its nickel trading. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the US$80,000 nickel price. Your decision to trade should depend on your attitude to risk, expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. In an earlier interview with Chinese news outlet Yicai, Xiang blamed "foreigners making some moves" for nickel's price spike. 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. 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. Why? 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. Neither party seems very keen on this idea, however. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. HONG KONGChinese nickel titan Tsingshan Holding Group faces billions of dollars in trading losses, people familiar with the company said, after .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;}Russias war in Ukraine set off an unprecedented rise in the price of a key metal used in stainless steel and electric-vehicle batteries. Then in . 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. Only you can decide whether nickel is a good buy or not. Advertise | Careers | Editorial Guidelines | Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. People forgot that this isnt a video game retailer; its an important physical commodity.. The industry leader for online information for tax, accounting and finance professionals. Worse, the chaos was spreading to other markets: Zinc prices spiked 15 per cent in a few minutes to a record high, only to collapse again. The frenzied move the largest-ever on the LME came as investors and industrial users who had sold the metal scrambled to buy the contracts back after prices initially rallied on concerns . Prices exploded, thanks mainly to one companyindeed, one man. 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. our Subscriber Agreement and by copyright law. Forbes places Xiang's real-time net worth at $1.2 billion. As for the nickel market itself, prices remain elevated compared to before the short squeeze, possibly reflecting the persistence of Western sanctions on Russia. The Companys registered office is at Bahamas Financial Centre, 3rd Floor, Shirley and Charlotte Street, P.O. Prices doubled to a record above $100,000 per tonne in a matter of hours on Tuesday, prompting the London Metal Exchange (LME) to halt trading. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. Nickel prices shot up as much as 250% in two days on the LME at the start of this week. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Jack Farchy, Alfred Cang and Mark Burton, Bloomberg News. 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 16th, then 8 percent the following day, 12 percent on March 18 and 15 percent from March 21) prevented futures prices from falling sufficiently to levels that would entice buyers to enter the market once more. 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. And thank you everyone for your attendance on today's call for the Nickel Industries Full Year 2022 Results. Remember, when prices move up, traders like Xiang who have sold futures contracts face margin calls; they must put up more cash to cover potential losses. Opinion. 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. For the LME, the future isunclear. ), by sales channel (Direct Channel, Distribution Channel), by player (Shandong Xinhai Technology, Tsingshan Holding Group, Eramet, Linyi Yichen Alloy, Jiangsu Delong Nickel Industry . Why bet against nickel when you have a nickel business? Bloomberg: Balance of Power focuses on the politics and policiesbeing shaped by the agenda of President Biden's administration. 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. The price move on March 8 created a systemic risk to the market, the LME said two days later. Tsingshan's difficulties paying its margin calls have put its . They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. "For the period of the standstill, the participating hedge banks agree not to close out positions against Tsingshan or to make further margin calls in respect of existing positions. (HNI) to produce higher-grade nickel matte. WATCH: Trading on LME is now set to resume Wednesday. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Financial markets are on edge after the London Metal Exchange last week granted a reprieve to the giant Chinese nickel producer, which . Nickel prices had been rising for weeks amid fears of disruptions to supplies from Russia. 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. Plus, 60% off clearance with American Eagle promo code, Wayfair promo code: 10% off any single purchase, Kohl's promo code: 30% off for Kohl's Rewards Members, 50% off + free delivery on any order with DoorDash promo code. If you rely on the information on this page then you do so entirely on your own risk. ), by application (Stainless Steel Industry, Electronics Industry, etc. It was 5:42 a.m. on March 8 in London when the nickel market broke. The paper loss stood at $8 billion on Monday, before violent moves in nickel prices led the London Metal Exchange to suspend trading in the metal on Tuesday, one of the people said. Keep in mind that past performance is no guarantee of future returns. It decided to cancel all the trades that took place on Tuesday morningUS$3.9 billion of them, according to a Bloomberg calculation. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. The three-month LME nickel prices hit an intra-day high at $101,365 a metric tonne on 8 March 2022. 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. 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. 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At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. LONDON (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 on the London . Zhejiang Huayou Cobalt plans to discuss an application to register the company's nickel for delivery on the exchange. [2] It moved into the Indonesian nickel industry in 2009. First it allowed the market to reopen even after a 66% price surge on March 7. 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. The giant commodity trader Glencore Plc also had a position on the LME that would benefit from rising prices. 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. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. 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. 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. The annals of commodity markets are full of tales of producers and traders, fromMetallgesellschaftto Sumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. Late on Monday, the LME also allowed traders to defer delivery obligations on all its main contracts -- including nickel -- an unusual step that underscores the pressure on commodities generally from the moves to isolate Russia economically. Today, Tsingshan is the biggest nickel producer in the world, accounting for around 20% of the global market. For participants in commodities exchanges, a price rally is not necessarily good news. Then on March 7, nickels price began its parabolic ascent, surging from US$30,000 a ton to more than US$50,000. Tsingshan and the LME declined to comment. See here for a complete list of exchanges and delays. Good buy or not to trade nickel or want to learn more about market! 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