By Lucy Battersby. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Those moves sent nickel to a record high of more than $US100,000 ($136,000) a tonne on Tuesday before trading was suspended. Certain sections of this system have been patented. Get in touch with us now. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. 3.28% . The Nikkelverk Operations. 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 exchangeunder review. Its unclear whether he will get his way. Copper. 92 000 MT. Xiang didnt believe the rally would last. Bloomberg. Tsingshan Group is the partner of Huayou that develops the nickel project. Born in 1958, Xiang founded his business more than 30 years ago as a workshop making frames for car doors and windows in Wenzhou, eastern China. 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. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. For most of the past decade, they'd traded between $10,000 and $20,000. When it was flying towards $US100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerage Bands Financial and a former LME board member. 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. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Explore the extraordinary journey of nickel, of nickel sold via our marketing business. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. 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. But its obligations dwarfed its available cash and bank credit. Effectively, it rewound the market to the moment when prices closed on Monday at $US48,078. Project manager for transition of Sudbury INO from CAMP to Deswik. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. We produce some of the world's purest nickel. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. Everything changed when Russia invaded Ukraine on February 24. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. The company had a further 120,000 tonnes or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase and Standard Chartered. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. They include: Koniambo is a large-scale integrated ferronickel mining and processing complex. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Tsingshan mostlymakesstainless steelthat isused inthepetroleum, chemicals, auto,and other fields. Source: LME. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. Not everyone shared his pessimism about prices. The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . ESC Mali school of busness. Poseidon Nickel is listed on the Australian Securities Exchange (ASX) and has a trailing 12-month revenue of around AUDC$256,000. Then, as now, a key factor was the intervention of the exchange. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. It was 5:42 a.m. on March 8 in London when the nickel market broke. Xiang isnt just a financial trader making paper bets on price moves. When prices rose above $US20,000 he would consider shorting nickel, the people said, because his production costs in Indonesia were as low as $US10,000 a tonne. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. The LME canceled transactions and suspended trading Tuesday after nickel's price jumped 90% to $55,000 per metric ton Monday, and then leapt again to a record high of $100,000 the next day . As Contract Writer / Coordinator, you will be part of the Contract Team, which is a team within the Coal Department. Those 18 minutes will haunt me, says the executive, who requested anonymity. People forgot that this isnt a video game retailer; its an important physical commodity.. ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. During the fiscal year 2021, the Swiss-based company Glencore reported a nickel production of some 102.3 thousand metric tons. People forgot that this isnt a video game retailer; its an important physical commodity. Your password has been changed successfully. 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. He went on to pioneer new methods for producing nickel and stainless steel that upended the markets and made his Tsingshan the worlds largest producer of both. Raglan Mine is a large nickel mining complex in the Nunavik region of northern Quebec, Canada.It is located approximately 100 kilometres (62 mi) south of Deception Bay. Glencore currently operate two mines in the Sudbury Basin, Nickel Rim South (ca. 115 000 MT. We have interests in a range of mining assets on four continents. But today things have reversed, that is, Tsingshan Group has prepared 200,000 . Why bet against nickel when you have a nickel business? Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. 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. If you don't see the email, check your junk, spam or other folders. 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. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. The LME halted trading of the metal yesterday and announced that it is unable to deliver on spot nickel contracts scheduled for March 9. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Sr. Exploration Geologist CMDIC Collahuasi 2006 - 2007 1 year. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. China imported 3.44 million tonnes of NPI/ferro-nickel in 2020, up by 79.89% year on year, while Indonesia's material imports came to 2.73 million tonnes in 2020, up 99.6% from a year earlier, according to China Customs data. He said UBS . (Yicai Global) March 9 --The chairman of Tsingshan Holding Group, the worlds second-largest nickel producer, said this weeks sky-rocketing prices of the metal have not impacted the Chinese firms operations or positions in the futures market. Report summary. Cash and short-term investments. The dollar hit a one-week low earlier Wednesday after China's yuan gained. Save my name, email, and website in this browser for the next time I comment. Perth, Western Australia, Australia. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . UNFORGIVABLE, tweeted Mark Thompson, a former trader at Trafigura and Apollo. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. 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. Glencore Nikkelverk is an important part of the green shift. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . Glencore Headquarters. 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. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. Nickel prices usually move a few hundred dollars per tonne in a day. The penalty is part of the $1.5 billion Glencore agreed to pay to resolve bribery and market-manipulation probes in the US, UK and Brazil. Cobalt. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. But the effects of the short squeeze are likely to be felt in other ways. While few observers believed Xiang could reach that level of production, he was confident. It also highlights the risks of an opaque market where a handful of players play outsized roles, deciding how and where purchasers like global battery makers secure raw materials. Worse, the chaos was spreading to other markets: Zinc prices spiked 15% in a few minutes to a record high, only to collapse again. Glencore's original trading business is still a powerhouse and is . 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. 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. Nickel rocketed to a record high above $100,000 a ton on Tuesday, driven in part by Tsingshan and its brokers activity, before trading was suspended. 485,996 followers. It was 5.42 am on March 8 in London when the nickel market broke. The Chinese government may also play a role. Please try again later. Matthew Chamberlain, the LMEs chief executive officer, had stayed up to watch. 02 March 2023. The company has assured creditor banks in China that its . this week's short squeeze is nonetheless likely to push . Why? For most of the past decade, theyd traded between $US10,000 ($13,700) and $US20,000. But its obligations dwarfed its available cash and bank credit. In August 2021, Glencore increased its medium-term emission reduction target to a 50% reduction by 2035 on 2019 levels and introduced a new short-term target of a 15% reduction by 2026 on 2019 levels. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. 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. Follow the topics, people and companies that matter to you. 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. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . Its not just a casino.. Tsingshans were even larger, numbering about $US3 billion, according to a calculation based on its total short position which, even after Xiang had closed out a portion of the bet in previous weeks, was over 150,000 tonnes. 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. Some traders and bankers have questioned whether a producer like Tsingshan, which has relatively low production costs and is active in all parts of the supply chain, really needs such a large hedging position. Evaporating liquidity. Raglan Mine is a nickel-copper operation located in the Arctic region at the extreme limit of northern Quebec. The world's top five nickel-producing companies. View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. Glencore Nikkelverk AS has a modern and complex processing system. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. For the LME, the future isunclear. For Xiangs big short position, that was painful. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. All prices are listed in Australian Dollars. Glencore plc is a Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. And once again, this short squeeze racked up billions in losses for those involved. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. People forgot that this isnt a video game retailer; its an important physical commodity.. Vale and Glencore announced today that they've entered a partnership to begin a feasibility study to explore Nickel Rim South. Sign up to get it every weekday morning. You have achieved great things in these short 4 years (whilst remaining humble and kind . Xiang was aware of flaws in his strategy, people familiar with the matter 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. Report this profile Report Report. The Chinese government may also play a role. Were working to restore it. Its unclear whether he will get his way. Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. Then came a geopolitical crisis that caught him unawares. Now, the traders watched with a mixture of horror and grim fascination as the price went skyward. 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. Sep 2021 - Present1 year 5 months. Provided short/mid/long/strategic schedules using Deswik. Tsingshans were even larger, numbering roughly $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. Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. For the LME to cancel nickel trades between willing buyers and sellers is unforgivable. The LMEs special committee held another call at about 6am. 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