Our fundamental responsibility is market stability, he told Bloomberg TV. Senior Mine Engineer. Furious investors and traders. The nickel market was anything but calm. 92 000 MT. Resetting your password will log you out of all your active Yicai Global sessions. Tsingshan is an excellent Chinese enterprise.. Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. The price was frozen, below the record high but still at $US80,000 a tonne. Now the Chinese tycoon known as Big Shot must decide whether to unwind a wager that risks fueling more dramatic swings in one of the worlds most prized metals. Baar, Switzerland 29 July 2022. 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. Yet the day before, the market had started to unravel . He was awakened by a phone call at 5:30 a.m. Mark Hansen, chief executive officer of Concord Resources. Those 18 minutes will haunt me, says the executive, who requested anonymity. It decided to cancel all the trades that took place on Tuesday morning some $US3.9 billion of them. Tsingshan is in touch with relevant parties and has the support of Chinese government departments and leaders, he added. We had a frenzy based on speculation that accelerated on Monday and Tuesday. Chinese tycoon behind nickels big short has power to fuel more drama. Source: LME. We have interests in a range of mining assets on four continents. It is owned and operated by Glencore Canada Corporation.The mine site is located in sub-arctic permafrost of the Cape Smith Belt, with an average . Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. For a while, it wasunclear which view of the market would prevail. Your password has been changed successfully. The LME at the end of the day is a physical metal market, he says. Project manager for transition of Sudbury INO from CAMP to Deswik. Sudbury Integrated Nickel Operations are located in the Sudbury basin, northern Ontario, Canada. Glencore Nickel. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Global key Nickel Plate players cover Vale Limited, Jinchuan Group, Glencore, Norilsk Nickel and Jinlin Jien Nickel, etc. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. 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. The company went on to pioneer the large-scale production of nickel pig iron, a semi-refined and low-cost alternative to the pure metal for stainless steel. Copper. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. this week's short squeeze is nonetheless likely to push . Report summary. 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. . 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. Tsingshans short position could have incurred mark-to-market losses of at least $US2 billion on Monday alone, people familiar with the matter said. 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. Charged with maximising the value of Glencore's physical nickel assets across the global portfolio through supporting collaboration efforts to manage risk and improve operability and performance. 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 makes steel corrosion-resistant and plays an essential role in our modern world. The world's top five nickel-producing companies. 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. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. 6W - 9M. The company had a further 120,000 tons or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase & Co. and Standard Chartered Plc. Enter the code below to reset your password. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . The fallout was immediate. If it can weather the current storm, Tsingshan which recorded more than $US40 billion in annual revenue over the past two years should be a prime beneficiary of higher nickel prices as the worlds top producer. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. At 1am on March 8, the market opened. At current prices, nickel would comprise 12% of Glencore's EBITDA. Glencore Nickel. 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. 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. Your email address will not be published. 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 . Bloomberg Daybreak Middle East. Excellent coverage of an earth-shaking event. (This account of events in the nickel market is based on dozens of interviews with people involved, many of whom requested anonymity because the matters are private.). Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. 92 132 MT. He was awakened by a phone call at 5.30am. On Monday, a week after trading had been suspended, Xiang was close to securing a loan facility from JPMorgan Chase and other banks that would allow him to maintain his short position and could lead to the market reopening. 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. Sep 2021 - Present1 year 5 months. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. Activity . Ore is processed at the Strathcona mill. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Others in the market may also push up prices anticipating that short covering. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trimtheir bets. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. Everything changed when Russia invaded Ukraine. Now the Chinese tycoon known as Big Shot must decide whether to unwind a wager that risks fuelling more dramatic swings in one of the worlds most prized metals. 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. Everything changed when Russia invaded Ukraine on February 24. Xiang didnt believe the rally would last. While few observers believed Xiang could reach that level of production, he was confident. The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. 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. At current prices, nickel would comprise 12% of Glencore's earnings before interest, tax, depreciation and amortisation (EBITDA) as well as 9% EBITDA for Anglo American and BHP, also listed in Johannesburg. Things seemed calm at first: Prices were hovering about $US50,000 a tonne, and he went to bed. 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. Including positions on the London Metal Exchange and bilateral bets with banks, Xiang still has short holdings in the region of 150,000 tons, the people said. Its unclear whether he will get his way. But the effects of the short squeeze are likely to be felt in other ways. It was 5.42 am on March 8 in London when the nickel market broke. I'll discuss why. Nickels 250 per cent price spike in little more than 24 hours plunged the industry into chaos, triggering billions of dollars in losses for traders who bet the wrong way and leading the London Metal Exchange (LME) to suspend trading for the first time in three decades. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. When it was flying towards $100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerageBands Financial Ltd.and a former LME board member. A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after this week's unprecedented price spike, according to people . But its obligations dwarfed its available cash and bank credit. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. Share. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Tsingshan Group is the partner of Huayou that develops the nickel project. For most of the past decade, they'd traded between $10,000 and $20,000. Anyone using the LME needs to understand that. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. 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. Nickels price moved sharply higher in the week after Russias military invasion. Beijing is supportive of him, Xiang told contacts recently. 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. Our nickel operations are in Canada, Australia, Norway, and New . Its unclear whether he will get his way. Those past scandals forced reforms on the exchange. https://bbgvod-azure-us-east1-zenko.global.ssl.fastly.net/vod/vod/m/ODg0NDM2Mg/Q2xvdWRfNTgyODY2/3fb888db-fa8e-42e4-b488-726dae69584b_150.mp4, Nickel price spike purely financial but Tsingshan effect could linger, EV Nickels stock soars after announcing enormous maiden mineral resource in Ontario, Iron ore price jumps on China data, bullish steel demand outlook, Copper price rises as Chinas economy shows strong recovery, Gold price hits 1-week high on robust China economic data, Musk tamps down speculation that Tesla will mine lithium, Monumental shift in way junior mining stocks are valued is coming, Advance Lithium in joint venture talks with Mexicos national lithium company, Goldman warns carmakers against buying miners: It always end in tears. A Glencore spokesman declined to comment. 21 962. Despite the recent upheaval, his company still remains the biggest in the nickel industry. A Glencore spokesman declined to comment. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. Bloomberg. Glencore Chief Executive Officer, Gary Nagle: "Overall production was mixed period-over-period (5 commodities up and 5 down in the table below), reflecting the Ernest Henry (copper/gold) and Bolivia (zinc) portfolio disposals, and geotechnical and processing challenges at Katanga, offset by improved cobalt, nickel and ferrochrome production levels and the . Market speculation has it that Tsingshan has a short position of about 200,000 tons of nickel, which it cannot deliver due to a lack of spot product after being assailed and squeezed out by US and European commodity futures giants such as Glencore, China Securities Journal reported yesterday. LME brokers and their clients were hit with margin call after margin call. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Xiang himself had little interest in international news, the people said, and the growing speculation over a possible war was hard to track in China. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. Mar 16, 2022 - 8.00am. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. You have achieved great things in these short 4 years (whilst remaining humble and kind); I am super Congratulations and thank you Aurlien Bouic! But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. Those moves sent nickel to a record high of more than $100,000 a ton on Tuesday beforetrading was suspended. Elon Musk wanted to buy 10-20% of Glencore, but refused to. Nickel prices doubled on Tuesday and briefly rose above a record $100,000 a tonne as banks and brokers rushed to close part of a huge position amassed by Xiang Guangda, the billionaire founder of . Its not just a casino.. By now, the entire nickel industry was in crisis. We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. The company had plans to produce 850,000 tons of nickel in 2022, an increase of 40% in a year, according to a person briefed on them. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. Then, as now, a key factor was the intervention of the exchange. (via NewsDirect) Helix Resources Ltd (ASX:HLX) MD Mike Rosenstreich tells Proactive the company is ready to spin out its nickel and cobalt interests in the prolific Cobar Basin of NSW into a special-purpose vehicle aimed at maximising value for shareholders. Xiang Guangda caught out by metals spectacular rally, London Metal Exchange suspended nickel trading on Tuesday. 6 kt/a nickel in concentrate). For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. Learn how we produce copper and the uses it is put to. Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. Coal Department. 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. For participants in commodities exchanges, a price rally is not necessarily good news. Why bet against nickel when you have a nickel business? The LME suspended nickel-market trading on Tuesday and the Shanghai Futures Exchangefollowed suita day later, after prices on Chinas top commodities bourse hit their daily upward limit. In theory, any price changes on the futures market should offset price changes in the value of the inventories as long as the traders can meet their margin calls. The difference is that nickel is a commodity that touches the entire global economy. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. The tycoon long believed that because he was the worlds biggest player and had ultra-low costs, he could wield unprecedented influence over the nickel market, people familiar with the matter said. The exchange had serious concerns about the ability of market participants to meet their resulting margin calls, raising the significant risk of multiple defaults. Despite that, Chamberlaininsisted to Bloomberg TVon March 9 that the solvency of the LME itself was never in doubt. Hes in the physical nickel business. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. Now they had to pay big margin calls on the exchange while receiving no margin from their client. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Its also one of the most important raw materials needed in making batteries for electric vehicles. I see all automakers within a short time creating their own 4680 . Still, the LME has weathered numerousscandalsbefore in its 145-year history, from a 1985crisis in the tin marketthat caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than $2 billion in losses. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. It traded briefly above $100,000 a ton early on Tuesday. . The fallout was immediate. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. 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. This suggests a possible upside of 27.1% from the stock's current price. . Nickelcopper ores have been mined there since 1928. He draws a comparison with Silver Thursday, the day in 1980 when an attempt by the Hunt brothers to corner the silver market came unstuck. Some aggrieved traders are already preparing to take legal action against the exchange. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Stainless steel with nickel content is omnipresent, for example in buildings, bridges and kitchen appliances. Copper. At the time of the LME's trading halt, nickel had gained more than 230% in March. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. ESC Mali school of busness. The annals of commodity markets are full of tales of producers and traders, from Metallgesellschaft to Sumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. Leeuwin managing director Chris Piggott was a senior geologist at ASX-listed Bellevue when it defined its core discoveries, and was part of the team that defined the greenfields Nova-Bollinger. Including positions on the London Metal Exchange and bilateral bets with banks, Xiang still has short holdings in the region of 150,000 tonnes, the people said. . 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. Why? While few observers believed Xiang could reach that level of production, he was confident. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. 2023 Glacier Media Group, All Rights Reserved. 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. The production of Glencore Nikkelverk in 2019. When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. Effectively, it rewound the market to the moment when prices closed on Monday at $48,078. The LME at the end of the day is a physical metal market, he says. 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. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. The dollar hit a one-week low earlier Wednesday after China's yuan gained. 389 8 Comments. Since 1910, nickel and other metals have been refined, produced and exported from the production plant in Kristiansand. MINK. Nickel. The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . Yet the firm's lucrative . In terms of revenue, the global largest two companies occupy a share . Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. On this day, however, metal traders were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. Still, the LME has weathered numerous scandals before in its 145-year history, from a 1985 crisis in the tin market that caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than $US2 billion in losses. . By Lucy Battersby. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. 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. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. For most of the past decade, theyd traded between $10,000 and $20,000. Nicknamed Big Shot in Chinese commodity circles, people who know him say he has absolute confidence in his convictions and doesnt hesitate to bet big on his visions for the future. The head of one London metals brokerage recalls feeling sick as he watched the moves, realizing what the spike in prices would mean for his company, the market, and the global metals industry. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. 3.28% . But its obligations dwarfed its available cash and bank credit. For most of the past decade, theyd traded between $US10,000 ($13,700) and $US20,000. Back Submit. Mid Term. For Xiangs big short position, that was painful. LME brokers and their clients were hit with margin call after margin call. 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. But Xiang must now decide what to do with those positions, which give him outsize influence on the price of a metal used in everything from electric-vehicle batteries to stainless-steel kitchen appliances. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. Its not just a casino. 115 000 MT. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. . gold and silver, amounted to 809 and 31 516 tons, respectively. Glencore Nickel. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. Then on March 7, nickels price began its parabolic ascent, surging from $US30,000 a tonne to more than $US50,000. 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. Now they had to pay big margin calls on the exchange while receiving no margin from their client. Feb 2021 - Dec 202111 months. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. Why bet against nickel when you have a nickel business? Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. 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. 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. The LME made a near-unprecedented decision. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Those moves sent nickel to a record high of more than $US100,000 ($136,000) a tonne on Tuesday before trading was suspended. People forgot that this isnt a video game retailer; its an important physical commodity.. . 5 000 MT. Tsingshan accounted for about half that amount. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Certain sections of this system have been patented. As Contract Writer / Coordinator, you will be part of the Contract Team, which is a team within the Coal Department. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . Substitute for nonferrous metals a call with Chamberlain interests in a range of mining assets on four continents buildings., bridges and kitchen appliances almost 6bn to shareholders after the fact position could have devastated the global industry... Push up prices anticipating that short covering be part of the wildest commodity price spikes in history squeeze is likely. 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