The price spike left Tsingshan exposed to $8 billion USD of trading losses whilst struggling to meet their margin calls. Moscow's invasion of Ukraine and the west's moves to sanction Russia, a key major supplier, have electrified an already bullish nickel market. read more. According to reports, Tsingshan Group plans to produce 850,000 tons of nickel in 2022, an increase of 40% compared with the production of nearly 600,000 tons in 2021. The short squeeze gathered momentum as Chinas Tsingshan Holding Group Co. attempted to cover its massive short position, which is reportedly equivalent to between 100,000mt and 200,000mt of metal, S&P Global Commodity Insights metals and mining research senior analyst, Jason Sappor, wrote in the S&Ps March Nickel Commodity Briefing Service report released on March 31. For the fourth quarter, the company expects to generate "high single-digit. (Podcast). Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. This copy is for your personal, non-commercial use only. Nickel trading resumed on 16 March 2022. 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 $2,250 a tonne, the capital required on 300,000 tonnes of nickel would be $675 million, according to Reuters calculations. 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 . 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. 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Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. Then on March 7, nickels price began its parabolic ascent, surging from US$30,000 a ton to more than US$50,000. Matthew Chamberlain, the LMEs chief executive officer, had stayed up to watch. Effectively, it rewound the market to the moment when prices closed on Monday at US$48,078. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. 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. You should do your own research, looking at the latest news, technical analysis, and analyst commentary before trading. All quotes delayed a minimum of 15 minutes. 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. Many traders expect the price to return to more normal levels once the margin call chaos has been resolved. This copy is for your personal, non-commercial use only. The simple fact here is that we did not have visibility over the size of the risk, Matthew Chamberlain, the LMEs chief executive, also stated. For non-personal use or to order multiple copies, please contact As for the nickel market itself, prices remain elevated compared to before the short squeeze, possibly reflecting the persistence of Western sanctions on Russia. 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. The major market events for the week ahead right in your inbox. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. 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. 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. Financial markets are on edge after the London Metal Exchange last week granted a reprieve to the giant Chinese nickel producer, which . They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. 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. 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. The difference between trading assets and CFDs. 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. Tsingshan Holdings was founded in 1988 by Xiang Guangda in Wenzhou. Traders must deposit cash, known as margin, with their brokers on a regular basis to cover potential losses on their positions. For non-personal use or to order multiple copies, please contact 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 Metal Exchange (LME) in a move that could help calm markets.. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. Its participants are a mix of the industrial metals companies, which tap the market to offset their price risks, and hedge funds, which use it to speculate. Sanctions being implemented by Western powers against Russia over the invasion of its neighbour raised immediate concerns over the global supply of nickel, a metal that is primarily used around the world to make stainless steel and batteries and of which Russia accounts for around 10 percent of global supply. Pada titik ini, posisi short Tsingshan dibekukan. . Several large brokers got margin calls of close to US$1 billion each over the course of the day. 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Indeed, Russia is the worlds third-biggest nickel producer after Indonesia and the Philippines. In recent days, Tsingshan has been under growing pressure from its brokers to meet margin calls on that position - a market dynamic which has helped to drive prices ever higher. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. read more. 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. The LME nickel short squeeze. It's been under growing pressure to meet the payments in recent days, the. 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. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. You should never trade more than you can afford to lose. 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 . 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. 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. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the US$80,000 nickel price. 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. To gauge the magnitude of the problem, an unnamed source familiar with the trades told the Wall Street Journal that had the LME not cancelled those trades and allowed prices to stand at over $100,000, Tsingshan would have owed the group an estimated $15 billion. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. 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 banks declined comment or did not respond to a request for comment. (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 . The difference is that nickel is a commodity that touches the entire global economy. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. On the London Metal Exchange, the premier trading and price-formation venue for industrial metals, nickel traded between $10,000 and $20,000 per metric ton and moved about $100 each day. A short squeeze is a market condition caused by massive short positions. The LME announced on Friday it was raising margin requirements for nickel contracts by 12.5% to $2,250 a tonne. The creditors involved include both local and intentional banks, including J.P. Morgan and China Construction Bank . Tsingshan, a privately-held company, and other 'shorts' faced larger margin calls on their short bets after the LME raised the amount of money companies had to deposit with it to cover their exposure to falling nickel prices, the three sources said. 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. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. Three-month nickel on the LME more than doubled to over $100,000 a ton yesterday before the LME stepped in to halt trading of the metal. LME brokers and their clients were hit with margin call after margin call. As with similar short squeezes of the past, such as those involving GameStop and Volkswagen, a short squeeze occurs when a market participant borrows a certain volume of a security and sells it, hoping that its price will fall. Tsingshan has secured credit promises from banks including JPMorgan Chase & Co. and China Construction Bank that could allow it to avoid defaulting on its margin calls, Bloomberg reported. Tsingshan agreed standstill with JPMorgan-led group of banks, Talks continue on loan facility to backstop short position. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. This is lower than Nickel Mines' expected profit margin for nickel in matte at current prices. But since last year, Tsingshan has also started to produce a source of nickel for batteries. Mr Xiang told Chinese news outlet Yicai that Tsingshan did not have any problems with its nickel trading. Then in . The LME suspended trading in nickel on Tuesday morning after one of the most dramatic price spikes in commodity market history. Margin call ini membuat harga nikel meledak dan menembus US$ 100 ribu per ton dari hanya US$ 25 ribu per ton. 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. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. But the LME has defended its actions, arguing that the decisions it took were made with full regard to regulatory due process and in the interests of the market as a whole, according to a spokesman for the exchange, who spoke to UK financial-news publication City A.M. during the week after the suspension. On March 8,2022 price of Nickel went suddenly up $100 per kilogram . But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. People forgot that this isnt a video game retailer; its an important physical commodity.. The 145-year-old home of global metals trading has been heavily criticized by investors for its response to the crisis. 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. Keep in mind that past performance is no guarantee of future returns. 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. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Why? Tsingshan yang dimiliki oleh swasta secara harfiah memiliki arti "gunung hijau", berbasis di kota Wenzhou di China dan memiliki . Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. A consortium of hedge bank creditors that has a standstill agreement with Tsingshan agreed not to close out the positions against the company or to make further margin calls on the existing positions. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. Tsingshan accounted for about half that amount. Tsingshan is also a nickel miner and operates nickel pig iron mines and production facilities. 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. The contribution of a dab has been 44 million to . Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. 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. [2] It moved into the Indonesian nickel industry in 2009. Nickels price moved sharply higher in the week after Russias invasion. 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. Forbes places Xiang's real-time net worth at $1.2 billion. Tsingshan's difficulties paying its margin calls have put its . 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 . That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. They had offset their deals with Tsingshan by placing their own short positions on the LME. See here for a complete list of exchanges and delays. 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. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. https://www.wsj.com/articles/nickel-market-crisis-sends-london-metal-exchange-scrambling-to-prevent-damage-11646858558. 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. 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. Distribution and use of this material are governed by Is the US Finally Warming to the Possibility of Creating a CBDC? Bloombergs Joe Deaux reports. 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. Already at an all-time high by 5:42 a.m., it lurched higher in stomach-churning leaps, soaring US$30,000 in a matter of minutes. FY18 RESULTS, FY19 GUIDANCE AND CORPORATE PRESENTATION 22 AUGUST 2018 AGENDA Results Guidance Corporate Operations Growth Exploration Nickel Market DISCLAIMER AND FORWARD The big fear was that Tsingshan would struggle to make margin calls with its bankers, potentially facing billions of dollars in losses. 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See here for a complete list of exchanges and delays. 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. Perhaps whats most surprising is that this nickel squeeze happened within a market that had, for the last few years, been comparatively sedate, with rangebound trading rarely breaking above the $20,000/metric tonne (mt) mark on the upside before 2022. 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Late Tuesday, the exchange said it anticipates trading wont resume before Friday. See here for a complete list of exchanges and delays. Given nickel matte prices of roughly $15,421/t May 18, we calculate a profit margin of $5,571/t for Tsingshan's nickel in matte. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Tsingshan was unable meet margin calls and only avoided bankruptcy after . It granted extra time on March 7th to CCBI Global, a Chinese broker for Tsingshan that is a member of the LME, to raise funds from its state-owned parent, China Construction Bank, to cover. Our Standards: The Thomson Reuters Trust Principles. 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. Based on the close on Friday night at $29,130, the LME were raising initial margins to a prudent 7.72% of the contract value. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. The war in Ukraine surprised the market and led to a price surge, pushing Tsingshans margin to billions as it rose in-line with nickel prices. In late February and early March, Tsingshan, which had sales of 352 billion yuan (US$56 billion) last year, paid its margin calls on time. Why bet against nickel when you have a nickel business? 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. Continue reading your article witha WSJ subscription, Already a member? LONDON, March 8 (Reuters) - 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. Assessing the Incremental Costs of Regulation and Supervision Faced by Next-Gen Operating Models for Bankers and Advisors, Macroprudential Policy and Real Estate Funds. Traders must deposit cash,. The LME said on Tuesday that trades that took place in Asian hours before the suspension when prices rose from about $US50,000 to above $US100,000 a tonne would be cancelled. For a while, it wasunclear which view of the market would prevail. One of the world's biggest nickel and stainless steel producers, Tsingshan started building a short position -- a wager that prices will fall -- in the nickel market last year. Prices for the metal, used in stainless steel and electric vehicle batteries, were last in that range in December. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, Final Early Bird Pricing! Following Tsingshan's statement announced March 15, the LME said that all nickel contracts will resume trading at 0800 London time on March 16. 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 . 2023 Capital Com Online Investments Ltd. Erin Jonasson. Advertise | Careers | Editorial Guidelines | On 15 March, Tsingshan reached an agreement with a consortium of hedge bank creditors on a standstill arrangement, with provision for the existing hedge positions to be reduced by the Tsingshan group in a fair and orderly manner as abnormal market conditions subside. To pay margin calls to its creditors, the company and banks will discuss standby... Who wasnt authorized to speak publicly had offset their deals with Tsingshan by placing their own positions... As margin, with their brokers on a regular basis to cover losses... 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