And once again, this short squeeze racked up billions in losses for those involved. We have interests in a range of mining assets on four continents. Canada Nickel Company Inc. $1.24. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Effectively, it rewound the market to the moment when prices closed on Monday at $48,078. Then, as now, a key factor was the intervention of the exchange. Everything changed when Russia invaded Ukraine. Worse, the chaos was spreading to other markets: Zinc prices spiked 15% in a few minutes to a record high, only to collapse again. . Nickel rocketed to a record high above US$100,000 a tonne on Tuesday before trading was suspended; Tsingshan could have suffered well over US$2 billion of daily losses at the most extreme point of . Tsingshans short position could have incurred mark-to-market losses of at least $2 billion on Monday alone, people familiar with the matter said. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. 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 . Save my name, email, and website in this browser for the next time I comment. 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. (Podcast). As Contract Writer / Coordinator, you will be part of the Contract Team, which is a team within the Coal Department. 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. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. Now they had to pay big margin calls on the exchange while receiving no margin from their client. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. Activity . 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. Nickel prices usually move a few hundred dollars per ton in a day. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. Resetting your password will log you out of all your active Yicai Global sessions. Now they had to pay big margin calls on the exchange while receiving no margin from their client. Earlier this week, nickel prices in London spiked byas much as 250%in little more than 24 hours. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. 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. Baar, Switzerland 29 July 2022. LME brokers and their clients were hit with margin call after margin call. The difference is that nickel is a commodity that touches the entire global economy. Mid Term. He was awakened by a phone call at 5:30 a.m. At current prices, nickel would comprise 12% of Glencore's EBITDA. 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. Despite the recent upheaval, his company still remains the biggest in the nickel industry. 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. 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. 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. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. It was 5.42 am on March 8 in London when the nickel market broke. 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. 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. Finance > Capital-markets. For the LME, the future isunclear. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. Poseidon Nickel is listed on the Australian Securities Exchange (ASX) and has a trailing 12-month revenue of around AUDC$256,000. A Glencore spokesman declined to comment. 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 . As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. 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. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. Feb 2021 - Dec 202111 months. Tsingshan mostlymakesstainless steelthat isused inthepetroleum, chemicals, auto,and other fields. Required fields are marked *. Then came a geopolitical crisis that caught him unawares. People forgot that this isnt a video game retailer; its an important physical commodity. 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. Glencore Nickel. Neither party seems very keen on this idea, however. Others took to social media. 6 kt/a nickel in concentrate). Others took to social media. Xiangs short position has now racked up billions of dollars in losses. For participants in commodities exchanges, a price rally is not necessarily good news. An empty order of 200,000 tons of nickel may cause Tsingshan Group to lose more than 5 billion US dollars. 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. The LME at the end of the day is a physical metal market, he says. The company has assured creditor banks in China that its . The LME at the end of the day is a physical metal market, he says. Report this profile Report Report. It is believed that Tsingshan has accumulated large short positions in nickel derivatives markets to hedge against possible price . 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. Glencore is a leading producer and marketer of nickel globally and Wayne has responsibility for the operation of mines and processing facilities in Australia, New Caledonia, Canada and Norway. . Glencore Nickel. 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. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, CEO of trading house Concord Resources. LME chief executive Matthew Chamberlain had stayed up to watch. At 1 a.m. on Tuesday, the market opened. We produce some of the worlds purest nickel. Not everyone shared his pessimism about prices. From a contractual perspective, you may be . 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. Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. Already at an all-time high by 5:42 a.m., it lurched higher in stomach-churning leaps, soaring $30,000 in a matter of minutes. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. But today things have reversed, that is, Tsingshan Group has prepared 200,000 . 485,996 followers. Xiangs short position has now racked upbillions of dollars in losses. Some aggrieved traders are already preparing to take legal action against the exchange. People forgot that this isnt a video game retailer; its an important physical commodity.. Glencore. Required fields are marked *. Vale is the world's largest producer of nickel, one of the most versatile metals in existence. 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. Last modified on Wed 15 Feb 2023 06.23 EST. Login. The world's top five nickel-producing companies. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. People forgot that this isnt a video game retailer; its an important physical commodity.. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. Copper. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. The nickel market was anything but calm. It was 5.42 am on March 8 in London when the nickel market broke. But the effects of the short squeeze are likely to be felt in other ways. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Our nickel operations are in Canada, Australia, Norway, and New . 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. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. 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. Glencore currently operate two mines in the Sudbury Basin, Nickel Rim South (ca. And that was just for the portion of the short position it held directly on the exchange about 30,000 tonnes. 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. On average, they predict the company's share price to reach GBX 620.91 in the next year. 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. Xiang isnt just a financial trader making paper bets on price moves. Nickelcopper ores have been mined there since 1928. 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. For Xiangs big short position, that was painful. 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. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. Enter the code below to reset your password. Senior Mine Engineer. Its also one of the most important raw materials needed in making batteries for electric vehicles. 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. Late Tuesday . #GlencoreCopper #MetalOfTheFuture https://lnkd.in/eEqPmJn9. 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. Even at that level, clients of LME brokers had failed to pay some $US500 million of margin calls in relation to their short positions on the exchange, says a person familiar with the matter. Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. In discussions over loans this week, Xiang told bankers hes confident his company can meet its obligations, according to people familiar. A Chinese tycoon who built a massive short position in nickel futures is facing billions of dollars in mark-to-market losses after this week's unprecedented price spike, according to people . Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. Undeterred, the Chinese tycoon has told banks he wants to maintain his position, and has asked them to keep funding him despite the losses. Just after 6am, the price of nickel passed $US100,000 a tonne. Our analysis assumes the development of Onaping Deeps with production commencing in 2021 at a capital cost of $750 million. ESC Mali school of busness. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Explore the latest reports and results, including financial results, production reports and our annual report. Complete Glencore PLC ADR stock information by Barron's. View real-time GLNCY stock price and news, along with industry-best analysis. But its obligations dwarfed its available cash and bank credit. The fallout was immediate. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . The price was frozen, below the record high but still at $80,000 a ton. 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. Nickel is a raw material that is characterized by exceptional resistance and special properties, thanks to which it has many applications. Glencore's original trading business is still a powerhouse and is . Massive short positions held by Xiangs Tsingshan Holding Group, the worlds largest nickel producer, have gone disastrously awry over the past few days. . Perth, Western Australia, Australia. Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. Tsingshan is in touch with relevant parties and has the support of Chinese government departments and leaders, he added. 92 000 MT. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Source: LME. Anyone using the LME needs to understand that. However, Xiang believed the risks to be manageable, the people said, even as an unidentified nickel stockpiler controlled at least half of the inventories on the exchange. For most of the past decade, they'd traded between $10,000 and $20,000. Matthew Chamberlain, the LMEs chief executive officer, had stayed up to watch. Tsingshan Group is the partner of Huayou that develops the nickel project. 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. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Hes in the physical nickel business. Xiang isnt just a financial trader making paper bets on price moves. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Si estn subiendo los predios de los metales y dedcuieto nuevas forulasparavas frmulas paraformar y tranformar los metales megustaria encontrar una empresa ,organizacin,para si le interereza ase un tratado denegosiar un trato demostraciones y prbarles yensearleslo que estudie transformaciones aliaciones dijitales y la fabricacionde. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. 1w. Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. I'll discuss why. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. The annals of commodity markets are full of tales of producers and traders, fromMetallgesellschafttoSumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. Back Submit. articles a month for anyone to read, even non-subscribers! 92 132 MT. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Company says it puts it into the league of the largest undeveloped nickel deposits in the world. Its unclear whether he will get his way. Others in the market may also push up prices in anticipation of that short covering. The spike was driven in large part by a short squeeze centered on Chinese tycoon Xiang Guangda, who hadamassed a big wagerthat nickel prices would fall through his companyTsingshan Holding Group Co.On Monday, a week after trading had been suspended, Xiang wasclose to securing a loan facilityfrom JPMorgan Chase & Co. and other banks that would allow him to maintain his short position and could lead to the market reopening. While Russias nickel exports havent been targeted by sanctions, US and European buyers have nonetheless sought alternatives to Russian sources. 2023 Glacier Media Group, All Rights Reserved. Glencore Headquarters. It marked the first major market failure since Russias invasion of Ukraine jolted global markets, showing how the removal of one of the worlds largest exporters of resources from the financial system within weeks is having ripple effects across the world. A market that many veterans simply describe as "broken." It's been three weeks since nickel was suspended on the London Metal Exchange after a . How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. He said UBS . In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. 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. Multinational commodities company Glencore has temporarily reduced production at the Murrin Murrin nickel-cobalt operation in Western Australia following a malfunction at an acid plant at the site.. Glencore's Murrin Murrin fully integrated nickel and cobalt operation is located approximately 880km east of Perth in the north-eastern Goldfields region. MT. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. Sulphuric acid. this week's short squeeze is nonetheless likely to push . At current prices, nickel would comprise 12% of Glencore's earnings before interest, tax, depreciation and amortisation (EBITDA) as well as 9% EBITDA for Anglo American and BHP, also listed in Johannesburg. 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. Nickel prices had been rising for weeks, amid fears that supplies from Russia the largest exporter of refined nickel would be disrupted if the country invaded Ukraine. Ore is processed at the Strathcona mill. The so-called "hold short position" focuses on the word "hold" to hold the price higher, and the ultimate goal is to force Tsingshan Group's 200,000 tons of nickel to sell short positions, and there is no way to go. (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.). Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. Global key Nickel Plate players cover Vale Limited, Jinchuan Group, Glencore, Norilsk Nickel and Jinlin Jien Nickel, etc. Why bet against nickel when you have a nickel business? 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. 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 . 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 first: prices were hovering around $ 50,000 a ton the of. Itself was never in doubt weighed on Tsingshans short-term cash flows, strong nickel prices the. Three of the short position has now racked up billions of dollars in losses coffee on way... Resources, help using this website - Accessibility statement executive, who is also Wenshou-based... 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