All quotes delayed a minimum of 15 minutes. Prices for the metal, used in stainless steel and electric vehicle batteries, were last in that range in December. Mampukan Tsingshan bertahan? Not everyone shared his pessimism about prices. 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. 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. You should do your own research, looking at the latest news, technical analysis, and analyst commentary before trading. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. Reuters could not determine how large Tsingshan's short position currently is after it cut its exposure. 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. The nickel market was anything but calm. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. On February 22, 2023, Yangjiang News, at the "New Track, Great Future--Qingshan S32001 Duplex Steel Channel Market Launch Conference" hosted by Qingyi Steel Tsingshan and others had to buy . NIC's operations and cash flow remained stable in 2022 despite Tsingshan's significant loss on its nickel short position in March 2022. The price was frozen, below the record high but still at US$80,000 a ton. 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. Tsingshan is an excellent Chinese enterprise, and our positions and operations dont have any problems.. 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. 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. Nickel trading resumed on 16 March 2022. 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. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the US$80,000 nickel price. The price move on March 8 created a systemic risk to the market, the LME said two days later. Assessing the Incremental Costs of Regulation and Supervision Faced by Next-Gen Operating Models for Bankers and Advisors, Macroprudential Policy and Real Estate Funds. 4.3 Global Ferro Nickel Sales Volume, Revenue, Price and Gross Margin (2016-2022) 4.4 United States Ferro Nickel Sales Volume, Revenue, Price and Gross Margin (2016-2022) At the center of the action is Chinese nickel titan Tsingshan Holding Group, the worlds biggest producer of a metal used in stainless steel and .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;}electric-vehicle batteries. Advertise | Careers | Editorial Guidelines | 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. Zhejiang Huayou Cobalt plans to discuss an application to register the company's nickel for delivery on the exchange. Yet the day before, the market had started to unravel, with prices rising by astunning66 per cent to US$48,078. losed Joint Stock Company FinTech Solutions. By now, the entire nickel industry was in crisis. Mr Xiang told Chinese news outlet Yicai that Tsingshan did not have any problems with its nickel trading. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. An employee. Tsingshan is also a nickel miner and operates nickel pig iron mines and production facilities. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. 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. call +44 20 3097 8888 support@capital.com. 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 . A short squeeze is a market condition caused by massive short positions. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. At $2,250 a tonne, the capital required on 300,000 tonnes of nickel would be $675 million, according to Reuters calculations. A week earlier, nickel was trading around $25,000 and the price of the metal has more than quadrupled in a matter of days. Tsingshan was betting that nickel prices would slump but instead they staged an unprecedented rally amid severe economic sanctions against Russia, a major global producer of the metal, over its invasion of Ukraine. 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. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. But according to Bloomberg, the LME refrained from putting it into default, which allowed the broker to settle the margin calls the following day after several clients, including Tsingshan, received loans to cover their positions. 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. Several large brokers got margin calls of close to US$1 billion each over the course of the day. LME brokers and their clients were hit with margin call after margin call. Tsingshan debacle exposes weak underbelly of LME. Subsequent reports suggested that only one-fifth of Tsingshans total nickel exposure was visible to the exchange; the rest was held in private over-the-counter trades with banks including JPMorgan Chase, BNP Paribas, Standard Chartered and United Overseas Bank Ltd. As such, Guangda was aiming for his massive short position to dominate the market and send the LME nickel price down. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Li Huan/Red Star News/VCG via Getty Images. Chinese nickel giant Tsingshan's hedge backfired Commodities companies of course generally benefit from higher prices for their products. Some have also warned that much of the chaos in the nickel market may not be over yet. 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The LME at the end of the day is a physical metal market, he says. Save my name, email, and website in this browser for the next time I comment. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. 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. 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 . 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. LMEs Chamberlain defended canceling the trades. 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. Things seemed calm at first: Prices were hovering around US$50,000 a ton, and he went to bed. read more. HONG KONGChinese nickel titan Tsingshan Holding Group faces billions of dollars in trading losses, people familiar with the company said, after Russia's war in Ukraine set off an unprecedented. The war in Ukraine surprised the market and led to a price surge, pushing Tsingshan's margin to billions as it rose in-line with nickel prices. 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. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. Nickel prices shot up as much as 250% in two days on the LME at the start of this week. 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 . On March 8,2022 price of Nickel went suddenly up $100 per kilogram . read most from bloomberg Xiang shrugged off suggestions to reduce short positions, Tsingshans nickel short position stood at about 150,000 tons. The fear was that Tsingshan could not make its margin calls, interim payments to parties on the other side of the trade. Bloomberg News' Joe Deaux reports. This will allow the trader to buy the security back at a lower price, return it to the lender and hopefully pocket a handsome profit. Assessing the Incremental Costs of Regulation and Supervision Faced by EU Banks Compared to Their US Peers, Interview with Mr. lvaro Saboro, Chief Executive Officer, Grupo Financiero BCT. 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. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. 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. 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. The price continued to climb higher as one of the world's largest nickel producers, Russia decided to invade Ukraine. Traders must deposit cash,. This copy is for your personal, non-commercial use only. For most of the past decade, theyd traded between US$10,000 and US$20,000. Comparable-store sales rose 19.3% in fiscal 2020 and grew another 14.4% year over year in the first nine months of 2021. Xiang didnt believe the rally would last. Many traders expect the price to return to more normal levels once the margin call chaos has been resolved. 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. The LME announced on Friday it was raising margin requirements for nickel contracts by 12.5% to $2,250 a tonne. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. Chinese metal giant Tsingshan Holding Group Ltd., caught in a massive short squeeze amid an unprecedented rally in the price of nickel, reached a deal with banks to avoid further margin calls.. Tsingshan, one of the world's biggest nickel and stainless steel producers, worked out a standstill arrangement with a consortium of hedge bank creditors that will allow the company to continue . 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. 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. China's Tsingshan Holding Group has reached agreements with two companies to swap its . Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. For non-personal use or to order multiple copies, please contact 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. 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