Follow the topics, people and companies that matter to you. It said the banks agreed not to make margin calls or close out their positions against Tsingshan while the company is resolving its nickel margin and settlement requirements. Our Standards: The Thomson Reuters Trust Principles. Nickel prices on the LME jumped to record highs above $100,000 a tonne on March 8 as Tsingshan bought large amounts to reduce its short positions in the metal, which is used to make stainless steel and electric vehicle batteries. Xiangs short position has now racked upbillions of dollars in losses. Box N-4865, Nassau, Bahamas. The extra charge kicks in at close of business on Tuesday. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. 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. 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. It also doesn't create waste and may help fight the climate crisis. Last chance for up to $40 off TurboTax, All Jeans + Pants 25% off! 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"In the course of the standstill period, Tsingshan and the consortium banks will progress discussions in relation to a standby secured liquidity facility," the company said. Anyone using the LME needs to understand that. 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. 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. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. 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. The most notable holder of short positions is Tsingshan Holdings - one of the world's largest nickel and stainless steel producers - which is believed to own positions on about 100,000 tons of nickel with paper losses totaling up to $8 billion before the London Metal Exchange halted trading. Our Standards: The Thomson Reuters Trust Principles. Then, as now, a key factor was the intervention of the exchange. Nevertheless, the short squeeze did trigger a whopping $8 billion margin call on Guangda. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. The price move on March 8 created a systemic risk to the market, the LME said two days later. 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. This copy is for your personal, non-commercial use only. Others in the market may also push up prices in anticipation of that short covering. 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. 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. Late Tuesday, the exchange said it anticipates trading wont resume before Friday. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. The XM Research Desk, manned by market expert professionals, provides live daily updates on all the major events of the global markets in the form of market reviews, forex news, technical analysis, investment topics, daily outlook and daily vidoes. The banks declined comment or did not respond to a request for comment. 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. 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. read more. 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. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Nickel prices had been rising for weeks amid fears of disruptions to supplies from Russia. Several large brokers got margin calls of close to US$1 billion each over the course of the day. Distribution and use of this material are governed by Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. Tsingshan's nickel matte plans could be 1st step into lithium battery value chain. Founded back in 1877 and now owned by Hong Kong Exchanges & Clearing (HKEX), the LME performs a critical role in determining benchmark prices for the global metals industry and provides a liquid market venue for financial institutions to make money. Copyright | We expect the LME nickel price to remain volatile in the near term, as the global nickel market finds equilibrium following recent events, S&Ps Sappor added, warning that an elevated risk of another short squeeze hitting the LME nickel market in the near term continued, given the presence of both a dominant warrant-holding position on available LME stocks and Tsingshans short position. 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 to suspend trading for the first time in three decades. Pleased to report an extremely strong year for the Nickel Industries and the. 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 Xiang's. 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. Save my name, email, and website in this browser for the next time I comment. China's Tsingshan Holding Group has reached agreements with two companies to swap its . But to hedge against a a drop in prices, they use. 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. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. FY18 RESULTS, FY19 GUIDANCE AND CORPORATE PRESENTATION 22 AUGUST 2018 AGENDA Results Guidance Corporate Operations Growth Exploration Nickel Market DISCLAIMER AND FORWARD A record-breaking rally in nickel prices that led the London Metal Exchange to halt trading on Tuesday is putting increased pressure on the Chinese stainless steel producer Tsingshan and its billionaire co-founder. 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. The London Metal Exchange initially announced rule changes late Monday in respond to a daily spike of as much of 90% (Reuters) Nickel, used in stainless steel and electric-vehicle batteries . Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. They had offset their deals with Tsingshan by placing their own short positions on the LME. NIC's operations and cash flow remained stable in 2022 despite Tsingshan's significant loss on its nickel short position in March 2022. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. Comparable-store sales rose 19.3% in fiscal 2020 and grew another 14.4% year over year in the first nine months of 2021. LME brokers and their clients were hit with margin call after margin call. Among them were some of the biggest names on Wall Street. (Podcast). ", Britain's Financial Conduct Authority (FCA) and the Bank of England are talking to the London Metal Exchange about the resumption of a fair and orderly market in nickel, the FCA said on Monday in response to a request for comment. Tsingshan sold 200,000 ton March 2023 contracts at price of $20 per kilo. The question is, will it continue to fail? Ghali posited to CNN. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. (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 . Known as "Big Shot" in China for his imposing presence in the metal industry, Xiang Guangda, the founder of the world's biggest nickel and stainless-steel firm, Tsingshan, had amassed a short position of more than 150,000 tonnes of nickel, which was about five times the volume of the metal held by the LME and equivalent to approximately The nickel market was anything but calm. Tsingshan and others had to buy . 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. This is lower than Nickel Mines' expected profit margin for nickel in matte at current prices. Neither party seems very keen on this idea, however. Opinion. .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. The super spike was driven by holders of short positions, including Tsingshan and its brokers, rushing to close them out. 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. Mampukan Tsingshan bertahan? Li Huan/Red Star News/VCG via Getty Images. Continue reading your article witha WSJ subscription, Already a member? You should never trade more than you can afford to lose. 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. The fallout was immediate. 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. Creditors and banks who acted for Tsingshan were demanding margin settlements and the closing of all positions. Indeed, Russia is the worlds third-biggest nickel producer after Indonesia and the Philippines. Tsingshan has said it has secured facilities with its consortium banks and will exit its position in an orderly manner. If nickel prices stay lofty it could complicate the energy transition with electric vehicle batteries costing more to produce. The broker was able to settle the margin calls on Tuesday after several clients, including Tsingshan, got loans to cover their positions, one of the people said. JPMorgan Chase & Co (JPM.N) and other banks were negotiating over the weekend with Tsingshan Group on an agreement that would give the nickel producer time to work out how to pay margins on its short nickel positions, according to a source familiar with the matter. Assessing the Incremental Costs of Regulation and Supervision Faced by Next-Gen Operating Models for Bankers and Advisors, Macroprudential Policy and Real Estate Funds. The Morowali park mainly produces nickel pig iron for stainless steel. 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. The creditors involved include both local and intentional banks, including J.P. Morgan and China Construction Bank . Weve received a lot of phone calls today, he said. 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. read more. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Contact us | Help using this website - Accessibility statement. Those payments have now been made, a person familiar with the matter said on Tuesday. For non-personal use or to order multiple copies, please contact 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 US$2 billion in losses. 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 industry leader for online information for tax, accounting and finance professionals. Jack Farchy, Alfred Cang and Mark Burton, Bloomberg News. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. For non-personal use or to order multiple copies, please contact The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. The majority of retail investor accounts lose money when trading CFDs. This created an unprecedented LME nickel short squeeze. LME CEO Matthew Chamberlain says suspending nickel trading and canceling the trades on the London Metal Exchange was the right decision for the sake of market stability. US manufacturing sector contracts again; raw material prices rise, U.S. House panel approves bill giving Biden power to ban TikTok, Additional reporting by Eric Onstad in London, by the Beijing newsroom and Min Zhang in Beijing; editing by Carmel Crimmins, Exclusive: Tesla readies revamp of Model Y codenamed 'Juniper', EV startups from Lucid to Rivian see demand fade, supply chain issues linger, Lilly to cut some list prices by 70% and offer $25 insulin, Exclusive: Biden administration to move on Midwest ethanol-blended gasoline rule this week -sources, Exclusive news, data and analytics for financial market professionals. 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 record rally fuelled by the conflict . See here for a complete list of exchanges and delays. In an earlier interview with Chinese news outlet Yicai, Xiang blamed "foreigners making some moves" for nickel's price spike. Q. 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. Xiang didnt believe the rally would last. Nickel prices have since fallen and the three-month nickel last settled at $23,371/tonne on 3 November. read more. Nickels price moved sharply higher in the week after Russias invasion. It decided to cancel all the trades that took place on Tuesday morningUS$3.9 billion of them, according to a Bloomberg calculation. Capital Com Online Investments Ltd is a limited liability company with company number 209236B. Only you can decide whether nickel is a good buy or not. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. The LME at the end of the day is a physical metal market, he says. https://www.wsj.com/articles/chinese-nickel-giant-tsingshan-faces-8-billion-trading-loss-as-ukraine-war-upends-market-11646765353. read more. Pada titik ini, posisi short Tsingshan dibekukan. The London Metal Exchange plans to resume trading in nickel, a week after it was suspended when the price of the metal surged to over $100,000 a ton. 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. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel matte. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. About 50,000 tonnes of Xiang's total nickel short position of over 150,000 tonnes is held through an over-the-counter position with JP Morgan, which means Tsingshan owed the bank about US$1 . Many traders expect the price to return to more normal levels once the margin call chaos has been resolved. See here for a complete list of exchanges and delays. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Metal industry sources said that for the duration of the standstill agreement Tsingshan, the world's largest nickel producer, may not have to buy any more metal to cover its short positions. Several large brokers got margin calls of close to US$1 billion each over the course of the day. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). Tsingshan Holding Group held the biggest short position for nickel on the LME. The move is a characteristic display of self-confidence from Xiang Guangda, the owner of Tsingshan Holding Group Co., and means that the nickel market could be set for more fireworks once it reopens. 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. Tsingshan debacle exposes weak underbelly of LME. "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. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. The arrangement will also help the pave the way for the London Metal Exchange to restart nickel trading, they said. 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. Then on March 7, nickel's price began its parabolic. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. 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Rushing to close its short positions and settled its margin calls to its brokers, rushing to close its positions. Stainless steel most comprehensive solution to manage all your complex and ever-expanding tax and compliance....