Chinese tycoon behind nickels big short has power to fuel more drama. 2023 Glacier Media Group, All Rights Reserved. Xiang Guangda, the billionaire owner of Tsingshan Holding Group. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. 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. Some aggrieved traders are already preparing to take legal action against the exchange. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Tsingshan is an excellent Chinese enterprise.. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Those past scandals forced reforms on the exchange. Report this profile Report Report. Short Term. Excellent coverage of an earth-shaking event. Qingshan Holding Group,Nickel,Futures Contract, Paris Looms as Europe's Largest Financial Market, French Economy Minister Says, Alibaba, Spain's El Corte Ingles Department Store Ally on Digital Retail, China's GEM to Supply 100,000 Tons of Lithium Battery Materials to Korea's Ecopro, Toshiba Home Appliances Returns to Profit After Midea Takeover, Chairman Says, How AR is Poised to Change Business Forever. Production 2019. He was awakened by a phone call at 5.30am. Sr. Exploration Geologist CMDIC Collahuasi 2006 - 2007 1 year. Nickel Rim South Mine. Nickel is also used in certain types of steel which lower magnetic properties. We produce some of the world's purest nickel. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Glencore Nickel. Then, as now, a key factor was the intervention of the exchange. He started increasing his short position on the London Metal Exchange. 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. For most of the past decade, they'd traded between $10,000 and $20,000. The nickel market was anything but calm. The latest price was A$0.04 (25-minute delay). Its not just a casino.. Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. Once its industrial complex reaches peak p. Its not just a casino. Xiang has told his banks and brokers that he still thinks the nickel price will fall andwants to keephis short position, Bloomberg reported on Thursday, citing people familiar with the matter. 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. 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. Sign up to get it every weekday morning. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. The Chinese government may also play a role. Shanghai's most-traded nickel futures contract . That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. Save my name, email, and website in this browser for the next time I comment. The metal is found in all our homes as a key ingredient of stainless steel. 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 . You have achieved great things in these short 4 years (whilst remaining humble and kind . The LME suspended nickel-market trading on Tuesday and the Shanghai Futures Exchange followed suit a day later, after prices on Chinas top commodities bourse hit their daily upward limit. 485,996 followers. Glencore Nikkelverk is an important part of the green shift. 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. In turn, the extraction of precious metals by the company in 2021, i.e. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. Nickel is mainly used in the production of stainless steel because it improves its strength and resistance to corrosion. Glencore plc was newly . 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. Global key Nickel Plate players cover Vale Limited, Jinchuan Group, Glencore, Norilsk Nickel and Jinlin Jien Nickel, etc. How to Geta Free Flight to Hong Kong in 500,000 Airline Ticket Giveaway, Stocks Drop for a Second Day; Yields Stay Elevated: Markets Wrap, The SPAC Fad Is Ending in a Pile of Bankruptcies and Fire Sales, Apple Suppliers Are Racing to Exit China, AirPods Maker Says, China Warns Hedonistic Bankers to Toe the Communist Party Line. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . Explore the latest reports and results, including financial results, production reports and our annual report. Nickels 250% 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 theLondon Metal Exchangeto suspend trading for the first time in three decades. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. However, reports that Beijing is mulling a rescue deal for Tsingshan Holding Group , the company behind nickel's big short . Everything changed when Russia invaded Ukraine. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. 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. Were sorry, this feature is currently unavailable. Its unclear whether he will get his way. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. The LME made a near-unprecedented decision. 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. The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. 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. 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. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. They include: Koniambo is a large-scale integrated ferronickel mining and processing complex. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. The giant commodity trader Glencore also had a position on the LME that would benefit from rising prices. 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. 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 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. But today things have reversed, that is, Tsingshan Group has prepared 200,000 . 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. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. The show will focus on global macro issues with a middle eastern context, provide expert analysis of major market moving stories and speak with the biggest newsmakers in the region. I'll discuss why. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Its also one of the most important raw materials needed in making batteries for electric vehicles. China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. Save my name, email, and website in this browser for the next time I comment. The total volume mined by Glencore in 2021 fell compared to 2020, in part due to supply chain problems and the closure of some mines. 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. 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. Your password has been changed successfully. Cobalt. Long Term . Source: LME. 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. Neither party seems very keen on this idea, however. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. The dollar hit a one-week low earlier Wednesday after China's yuan gained. If it can weather the current storm, Tsingshan which recorded more than $40 billion in annual revenue over the past two years should be a prime beneficiary of higher nickel prices as the worlds top producer. (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. In this position, you will be responsible for the drafting of sales and purchase contracts and related legal documents. EV Nickels stock soars after announcing enormous maiden mineral resource in Ontario, Anglo seeks to invest in start-ups to cut steel CO2 emissions, Agnico Eagle reinvests in Rupert Resources and its Ikkari gold project, Glencore ordered to pay $700 million by US judge in bribery case, https://dtmagazine.com/money724-302022.php#wrap, 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. 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. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. Xiang didnt believe the rally would last. All Rights Reserved. A year after the short squeeze that brought the LME to the brink of collapse, the nickel market remains barely functional, with trading volumes sharply lower and prices regularly experiencing wild . A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. It was 5.42 am on March 8 in London when the nickel market broke. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. Were working to restore it. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Chinese nickel heavyweight Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices suddenly exploded higher following Russia 's invasion of Ukraine, The Wall Street . Baar, Switzerland 29 July 2022. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. 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. 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 prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Worse, the chaos was spreading to other markets: Zinc prices spiked 15% in a few minutes to a record high, only to collapse again. MINK. For Xiangs big short position, that was painful. Hes in the physical nickel business. Xiang isnt just a financial trader making paper bets on price moves. 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. 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. Then came a geopolitical crisis that caught him unawares. Among them were some of the biggest names on Wall Street. Not everyone shared his pessimism about prices. It decided to cancel all the trades that took place on Tuesday morning some $US3.9 billion of them. When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. Our fundamental responsibility is market stability, he told Bloomberg TV. 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. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. By now, the entire nickel industry was in crisis. . Their GLEN share price forecasts range from GBX 540 to GBX 740. 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 . 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. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. . When prices rose above $20,000 he would consider shorting nickel, the people said, because his production costs in Indonesia were as low as $10,000 a ton. Those past scandals forced reforms on the exchange. 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Glencore Nickel. Our nickel operations are in Canada, Australia, Norway, and New Caledonia. The difference is that nickel is a commodity that touches the entire global economy. Tsingshan Group is the partner of Huayou that develops the nickel project. Glencore's original trading business is still a powerhouse and is . This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, chief executive officer of trading houseConcord Resources Ltd.We had a frenzy based on speculation that accelerated on Monday and Tuesday. 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. Complete Glencore PLC ADR stock information by Barron's. View real-time GLNCY stock price and news, along with industry-best analysis. LME chief executive Matthew Chamberlain had stayed up to watch. 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 . Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. Live from Dubai, connecting Asian markets to the European opens. We had a frenzy based on speculation that accelerated on Monday and Tuesday. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. Required fields are marked *. Xiangs short position has now racked upbillions of dollars in losses. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. For Xiangs big short position, that was painful. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. Glencore. Tsingshan accounted for about half that amount. 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. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. 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. 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. Senior Mine Engineer. 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. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Glencore plc is a Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. Your email address will not be published. Finance > Capital-markets. Rio Tinto, the world's second-largest mining company by market capitalization, last week said it would lift annual capital investment to as much as $10 billion in 2024 and 2025, up around 25% on . Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. 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. An empty order of 200,000 tons of nickel may cause Tsingshan Group to lose more than 5 billion US dollars. The company had plans to produce 850,000 tonnes of nickel in 2022, an increase of 40 per cent in a year, says a person briefed on them. Soaring coal and metal prices powered Swiss mining and trading firm Glencore to a net income of $5 billion in 2021, a notable recovery from its $1.9 billion loss in 2020. 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. By Lucy Battersby. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. 20 kt/a nickel in concentrate) and Fraser Morgan (ca. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. Glencore Headquarters. The production of Glencore Nikkelverk in 2019. Beijing is supportive of him, Xiang told contacts recently. Nickels price moved sharply higher in the week after Russias military invasion. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. 2017 - 2018 Yicai Global, Yicai Media Group. This type is different from the mainstream ferro-nickel and nickel pig iron. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. Vale and Glencore announced today that they've entered a partnership to begin a feasibility study to explore Nickel Rim South. 6W - 9M. 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. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. Enter the code below to reset your password. 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. Of him, Xiang Guangda, who is also used in the two... Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes nickel. Years ( whilst remaining glencore nickel short and kind point is a large-scale integrated ferronickel mining and processing.! Is the worlds third-largest producer of nickel, as well as a recycler of nickel-containing materials as... ( USD36,235 ) a tonthe same day, and he went to bed measures as position limits and transparency. 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