The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Perhaps what's 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. Glencore plc is a Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. For participants in commodities exchanges, a price rally is not necessarily good news. What does Tsingshan Group's rival, Glencore, do? Sign up to get it every weekday morning. A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after this weeks unprecedented price spike, according to people familiar with the matter. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. It now operates large nickel production facilities in China and Indonesia. Furious investors and traders. I'll discuss why. For the LME, the future isunclear. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. But the effects of the short squeeze are likely to be felt in other ways. To date, the company has sold a tonne of nickel for an average of $ 18,474. Nickel prices usually move a few hundred dollars per ton in a day. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. 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. Vale - 208,000 metric tonnes. Executives fromGoldman Sachs Group Inc.voiced their displeasure at the decision on a call with Chamberlain. Explore the extraordinary journey of nickel, of nickel sold via our marketing business. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Xiang didnt believe the rally would last. (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. Just after 6 a.m., the price of nickel passed $100,000 a ton. Nickels price moved sharply higher in the week after Russias military invasion. 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. Others took to social media. 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. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. 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. However, Xiang believed the risks to be manageable, the people said, even as anunidentified nickel stockpilercontrolled at least half of the inventories on the exchange. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Long Term . 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. The nickel market was anything but calm. Glencore is one of the largest miners in the world that supply copper and nickel, two of my essential CCLANGs for the future of electrification. All Rights Reserved. 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, Chamberlain insisted on March 9 that the solvency of the LME itself was never in doubt. 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 . INF News.com. Xiang Guangda -- who controls the worlds largest nickel producer, Tsingshan Holding Group Co., 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. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. In the meantime, the nickel market is on ice, with traders unable to exit their positions, and many billions of dollars tied up in margin calls. 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. 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. And once again, this short squeeze racked up billions in losses for those involved. (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. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. The company has assured creditor banks in China that its . 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. Nickelcopper ores have been mined there since 1928. But its obligations dwarfed its available cash and bank credit. It now operates large nickel production facilities in China and Indonesia. 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. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. One thing is sure: If Xiang can weather the storm, Tsingshans nickel-producing assets stand to benefit from the higher prices, offsetting losses from the short. Nickel prices had been rising for weeks, amid fears that supplies from Russia the largest exporter of refined nickel would be disrupted if the countryinvaded Ukraine. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. 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. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trim their bets. Those past scandals forced reforms on the exchange. Mid Term. 2023 Glacier Media Group, All Rights Reserved. While few observers believed Xiang could reach that level of production, he was confident. In terms of revenue, the global largest two companies occupy a share . The Chinese government may also play a role. 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. Their GLEN share price forecasts range from GBX 540 to GBX 740. Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. This suggests a possible upside of 27.1% from the stock's current price. Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trimtheir bets. Nickels price moved sharply higher in the week after Russias invasion. Golf's Greatest Holes: Golfing legend Paul McGinley takes television presenter Chris Hollins on a tour of the best golf courses in Ireland and Northern Ireland. Worse, the chaos was spreading to other markets: Zinc prices spiked 15% in a few minutes to a record high, only to collapse again. The price move on March 8 created a systemic risk to the market, the LME said two days later. 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. In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. I see all automakers within a short time creating their own 4680 . Tsingshan accounted for about half that amount. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Production 2019. We have interests in a range of mining assets on four continents. Cliff Asness, founder ofAQR Capital Management,accused the LME, which was for more than a century owned by its members but in 2012 was sold to Hong Kong Exchanges & Clearing, of stealing money from market participants trading in good faith and giving it to Chinese nickel producers and their banks. LMEs Chamberlain defended canceling the trades. Traders and brokers on the open outcry pit at the London Metal Exchange. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. While Russias nickel exports havent been targeted by sanctions, US and European buyers have nonetheless sought alternatives to Russian sources. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. 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. MMC Norilsk Nickel Recent Development 11.3 Glencore 11.3.1 Glencore Company Detail 11.3.2 Glencore Business Overview 11.3.3 Glencore Nickel Mining . Excellent coverage of an earth-shaking event. 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However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. 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. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Its not just a casino. Copper. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. 1. Login. 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. Tsingshan Group is the partner of Huayou that develops the nickel project. They include: Koniambo is a large-scale integrated ferronickel mining and processing complex. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. Xiang didnt believe the rally would last. Xstrata Nickel Montcalm Mine 2007 - 2010 3 years. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. 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. Tsingshan accounted for about half that amount. 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