Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Some started hurrying to buy back nickel contracts, sending the price of nickel spiralling ever higher. Tsingshan needs to increase the contract margins or roll over the futures if it decides to keep the contracts, which would require a huge amount of cash, an analyst told Yicai Global. 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. All Rights Reserved. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . Glencore Nikkelverk AS has a modern and complex processing system. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Located in Kristiansand, Nikkelverk is the largest nickel refinery in the western world producing high-quality nickel and cobalt. 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. Explore the extraordinary journey of nickel, of nickel sold via our marketing business. Xiangs short position has now racked upbillions of dollars in losses. Neither party seems very keen on this idea, however. Complete Glencore PLC ADR stock information by Barron's. View real-time GLNCY stock price and news, along with industry-best analysis. 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. INF News.com. 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. He started increasing his short position on the London Metal Exchange. The LME at the end of the day is a physical metal market, he says. Just after 6 a.m., the price of nickel passed $100,000 a ton. We produce some of the worlds purest nickel. Xiang was aware of flaws in his strategy, people familiar with the matter said. Senior Mine Engineer. Your email address will not be published. Nickel prices usually move a few hundred dollars per tonne in a day. Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. 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. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Provided short/mid/long/strategic schedules using Deswik. As Contract Writer / Coordinator, you will be part of the Contract Team, which is a team within the Coal Department. The price was frozen, below the record high but still at $US80,000 a tonne. Mid Term. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. 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. Report summary. But its obligations dwarfed its available cash and bank credit. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. Vale is the world's largest producer of nickel, one of the most versatile metals in existence. On average, they predict the company's share price to reach GBX 620.91 in the next year. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. (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.). Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . Nickel. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. (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. 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. 2023 Glacier Media Group, All Rights Reserved. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trimtheir bets. But while the short squeeze has weighed on Tsingshan's . 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 . He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Back Submit. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. Nickels price moved sharply higher in the week after Russias military invasion. I'll discuss why. 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 . To date, the company has sold a tonne of nickel for an average of $ 18,474. By Lucy Battersby. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. In this position, you will be responsible for the drafting of sales and purchase contracts and related legal documents. 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. 1w. #GlencoreCopper #MetalOfTheFuture https://lnkd.in/eEqPmJn9. , Mar 23, 2022. Our nickel operations are in Canada, Australia, Norway, and New Caledonia. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. 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. Xiangs short position has now racked up billions of dollars in losses. Cliff Asness, founder of AQR 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. 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 Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Bloomberg. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. 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. 3.28% . It was 5:42 a.m. on March 8 in London when the nickel market broke. 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. LME brokers and their clients were hit with margin call after margin call. Save my name, email, and website in this browser for the next time I comment. For participants in commodities exchanges, a price rally is not necessarily good news. Despite the recent upheaval, his company still remains the biggest in the nickel industry. While few observers believed Xiang could reach that level of production, he was confident. 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. 2W - 6W. Some think this could herald the end of the exchange itself. 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 . 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. Tsingshan Group placed a short nickel order, and the matter of being shorted by the opponent was brushed off. 485,996 followers. People forgot that this isnt a video game retailer; its an important physical commodity.. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. The Chinese government may also play a role. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Strong passwords include numbers,letters,and special characters. Required fields are marked *. Its also one of the most important raw materials needed in making batteries for electric vehicles. 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. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. Hes in the physical nickel business. It marked the first major market failure sinceRussias invasion of Ukrainejolted global markets, showing how the removal of one of the worlds largest exporters of resources from the financial system in the space of weeks is having ripple effects across the world. 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. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. Our fundamental responsibility is market stability, he told Bloomberg TV. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. By now, the entire nickel industry was in crisis. 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 . Hes in the physical nickel business. Nickel prices usually move a few hundred dollars per ton in a day. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. . A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. 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. (" Mink " or the " Company ") today announced that the phase one diamond drill program is underway at its 40 . Certain sections of this system have been patented. . Ore is processed at the Strathcona mill. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Our fundamental responsibility is market stability, he said. Others in the market may also push up prices anticipating that short covering. 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. 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. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. 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. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. 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. The nickel market was anything but calm. 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. 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. Some aggrieved traders are already preparing to take legal action against the exchange. 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 . Most analysts sided with Xiang, at least in the medium term, believing that nickel production led by Tsingshan and its competitors in Indonesia would outpace demand. In turn, the extraction of precious metals by the company in 2021, i.e. Source: LME. Glencore plc is a Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. 92 132 MT. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Were sorry, this feature is currently unavailable. Trafigura Group sold cargoes of nickel it now believes may not have contained any of the metal to buyers including a US trade finance firm and a state-owned Jack Farchy on LinkedIn: Trafigura's Non-Existent Nickel Was Bought by a US Firm 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. Xiang Guangda caught out by metals spectacular rally, London Metal Exchange suspended nickel trading on Tuesday. Then came a geopolitical crisis that caught him unawares. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. Then came a geopolitical crisis that caught him unawares. At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Why bet against nickel when you have a nickel business? They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. In a squeeze, rising prices put traders betting on a drop in an ever-tougher financial position, forcing them or brokers and banks doing business on their behalf to buy the asset, a trade known as short covering that can drive prices even higher. 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