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. ESC Mali school of busness. The company has assured creditor banks in China that its . Even at that level, clients of LME brokers had failed to pay some $500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. But today things have reversed, that is, Tsingshan Group has prepared 200,000 . Located in Kristiansand, Nikkelverk is the largest nickel refinery in the western world producing high-quality nickel and cobalt. 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. It decided to cancel all the trades that took place on Tuesday morning some $US3.9 billion of them. Xiang was aware of flaws in his strategy, people familiar with the matter said. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. This type is different from the mainstream ferro-nickel and nickel pig iron. Then on March 7, nickels price began its parabolic ascent, surging from $US30,000 a tonne to more than $US50,000. 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. In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. The wild rise of nickel drew comparisons to the short squeezes in meme stocks such as GameStop that gripped retail investors for much of last year. Were sorry, this feature is currently unavailable. . But its obligations dwarfed its available cash and bank credit. Now they recognised that they had to suspend trading. The investment is part of Ruperts non-brokered private placement for gross proceeds of about $35 million. The production of Glencore Nikkelverk in 2019. Xiangs short position has now racked up billions of dollars in losses. Xiang isnt just a financial trader making paper bets on price moves. 02 March 2023. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. Nickel prices usually move a few hundred dollars per ton in a day. 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. Our fundamental responsibility is market stability, he told Bloomberg TV. But while the short squeeze has weighed on Tsingshan's . The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. It was 5:42 a.m. on March 8 in London when the nickel market broke. Short Interest; Premarket Screener . Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Xiang didnt believe the rally would last. And once again, this short squeeze racked up billions in losses for those involved. 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. Stephen Engle reports. He went on to pioneer new methods for producing nickel and stainless steel that upended the markets and made his Tsingshan the worlds largest producer of both. The difference is that nickel is a commodity that touches the entire global economy. Last modified on Wed 15 Feb 2023 06.23 EST. Xiang didnt believe the rally would last. Late Tuesday . Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . 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. Mar 16, 2022 - 8.00am. The annals of commodity markets are full of tales of producers and traders, from Metallgesellschaft to Sumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. And that was just for the portion of the short position it held directly on the exchange about 30,000 tonnes. 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 Murrin Murrin Mine is a major nickel-cobalt mining operation being conducted in the North Eastern Goldfields, approximately 45 km east of Leonora, Western Australia.The project was initiated as a joint venture between Murrin Murrin Holdings Pty Ltd, a wholly owned subsidiary of Anaconda Nickel Limited (whose share was 60%) and Glenmurrin Pty Ltd, a wholly owned subsidiary of Glencore . Others in the market may also push up prices anticipating that short covering. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. As at January 31, 2023 Glencore holds 72,008,404 Common Shares, representing approximately 70.8% of the issued and outstanding Common Shares. Glencore Nickel. This suggests a possible upside of 27.1% from the stock's current price. Among them were some of the biggest names on Wall Street. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. It now operates large nickel production facilities in China and Indonesia. Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. 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. The spike was driven in large part by a short squeeze centred on Chinese tycoon Xiang Guangda, who had amassed a big wager that nickel prices would fall through his company Tsingshan Holding Group. 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. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Glencore is still a short opportunity but mid-2022 looks to be the end of long run commodity bear trend. Not everyone shared his pessimism about prices. 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. 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. Vale and Glencore announced today that they've entered a partnership to begin a feasibility study to explore Nickel Rim South. Everything changed when Russia invaded Ukraine. Canada Nickel Company Inc. $1.24. . Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. The world's top five nickel-producing companies. INF News.com. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. . . Provided short/mid/long/strategic schedules using Deswik. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Just after 6am, the price of nickel passed $US100,000 a tonne. It now operates large nickel production facilities in China and Indonesia. Elon Musk wanted to buy 10-20% of Glencore, but refused to. Others took to social media. Harjavalta nickel smelter in Finland (Credit: Boliden). Production 2019. . Raglan Mine is a nickel-copper operation located in the Arctic region at the extreme limit of northern Quebec. Glencore has a short interest ratio ("days to cover") of 0.2, which is generally considered an acceptable ratio of short interest to trading volume. 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. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. Then came a geopolitical crisis that caught him unawares. Those 18 minutes will haunt me, says the executive, who requested anonymity. 6 kt/a nickel in concentrate). Some market rumors are circulating that Glencore might squeeze Tsingshan on LME Nickel for its 60% stake in a nickel mine in Indonesia. 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 . Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. Glencore Nickel. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. 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. To date, the company has sold a tonne of nickel for an average of $ 18,474. For participants in commodities exchanges, a price rally is not necessarily good news. While Russias nickel exports havent been targeted by sanctions, US and European buyers have nonetheless sought alternatives to Russian sources. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. 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. By Lucy Battersby. China imported 3.44 million tonnes of NPI/ferro-nickel in 2020, up by 79.89% year on year, while Indonesia's material imports came to 2.73 million tonnes in 2020, up 99.6% from a year earlier, according to China Customs data. Furious investors and traders. It was 5.42 am on March 8 in London when the nickel market broke. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. Their GLEN share price forecasts range from GBX 540 to GBX 740. ICP( B2-20050348 (AVSP):2014002, By signing up, you agree to our Terms, Privacy Policy. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, CEO of trading house Concord Resources. (By Jack Farchy, Alfred Cang and Mark Burton, with assistance from Sridhar Natarajan), Your email address will not be published. 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 product to deliver with LME nickel contracts is cathode nickel containing at least 99.8 percent nickel, in accordancewiththeAmerican Society for Testing and Materials' specifications. The latest price was A$0.04 (25-minute delay). The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. At 1am on March 8, the market opened. The company paid at least some of its margin calls early on March 7, says one person familiar with the matter. 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 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. Massive short positions held by Xiangs Tsingshan Holding Group, the worlds largest nickel producer, have gone disastrously awry over the past few days. We have interests in a range of mining assets on four continents. Required fields are marked *. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. 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. 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 price was frozen, below the record high but still at $80,000 a ton. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. The price move on March 8 created a systemic risk to the market, the LME said two days later. Sign up to get it every weekday morning. Vale - 208,000 metric tonnes. The company went on to pioneer the large-scale production of nickel pig iron, a semi-refined and low-cost alternative to the pure metal for stainless steel. Still, contracts on the LME are backed by physical metal in a network of warehouses around the world, providing a direct link with the real-world metals industry. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . Others in the market may also push up prices in anticipation of that short covering. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. Glencore UK Ltd, Izimbiwa Coal (Pty) Ltd, Katanga Mining Limited, Kazzinc Ltd., Koniambo Nickel S.A.S., Magdeburg, Mangoola Coal Operations Pty Limited, McArthur River Mining Pty Ltd, Minera . Since 1910, nickel and other metals have been refined, produced and exported from the production plant in Kristiansand. 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. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. A Glencore spokesman declined to comment. Cobalt. But the effects of the short squeeze are likely to be felt in other ways. 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. Nickel prices usually move a few hundred dollars per tonne in a day. 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. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. Tsingshan is in touch with relevant parties and has the support of Chinese government departments and leaders, he added. 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