That could either result in a huge loss for Tsingshan or the sale of a more than 60 percent stake in the companys Indonesian nickel mine and interest in its industrial park in the southeast Asian country, the report said. 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. 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. He said UBS . 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. During the fiscal year 2021, the Swiss-based company Glencore reported a nickel production of some 102.3 thousand metric tons. 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. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. A Glencore spokesman declined to comment. Their GLEN share price forecasts range from GBX 540 to GBX 740. Required fields are marked *. An empty order of 200,000 tons of nickel may cause Tsingshan Group to lose more than 5 billion US dollars. Nickel is also used in certain types of steel which lower magnetic properties. Nickel rocketed to a record high above $100,000 a ton on Tuesday, driven in part by Tsingshan and its brokers activity, before trading was suspended. Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. Nickel. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. Report summary. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. Stainless steel with nickel content is omnipresent, for example in buildings, bridges and kitchen appliances. Anyone using the LME needs to understand that. Sign up to get it every weekday morning. Xiangs short position has now racked up billions of dollars in losses. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Short Term. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. Xiang was aware of flaws in his strategy, people familiar with the matter said. Bloomberg. 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. 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 company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. 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. Senior Mine Engineer. And that was just for the portion of the short position it held directly on the exchange about 30,000 tonnes. At 1 a.m. on Tuesday, the market opened. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. Share. Glencore Nickel. For most of the past decade, theyd traded between $10,000 and $20,000. Nickel prices surged to an all-time high on Tuesday, up roughly 250% in just two days, and forcing the London Metal Exchange to close trading. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Executives at Tower Research Capital, one of Wall Streets oldest electronic market-makers, reined in its trading activity on the LME and put its membership in the exchangeunder review. . Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Save my name, email, and website in this browser for the next time I comment. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. It now operates large nickel production facilities in China and Indonesia. We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. 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. Strong passwords include numbers,letters,and special characters. Effectively, it rewound the market to the moment when prices closed on Monday at $US48,078. The company had a further 120,000 tons or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase & Co. and Standard Chartered Plc. 389 8 Comments. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. 2W - 6W. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . Vale - 208,000 metric tonnes. . (" Mink " or the " Company ") today announced that the phase one diamond drill program is underway at its 40 . Nickels price moved sharply higher in the week after Russias military invasion. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. Yet the firm's lucrative . Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. For the LME, the future isunclear. 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. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. LME chief executive Matthew Chamberlain had stayed up to watch. Certain sections of this system have been patented. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to . 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. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. They include: Koniambo is a large-scale integrated ferronickel mining and processing complex. Glencore is still a short opportunity but mid-2022 looks to be the end of long run commodity bear trend. Bloomberg Daybreak Middle East. For Xiangs big short position, that was painful. While few observers believed Xiang could reach that level of production, he was confident. Cash and short-term investments. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Nickel. this week's short squeeze is nonetheless likely to push . The LME made a near-unprecedented decision. Executives at Tower Research Capital, one of Wall Streets oldest electronic market-makers, reined in its trading activity on the LME and put its membership in the exchange under review. Several large brokers got margin calls of close to $1 billion each over the course of the day. Harjavalta nickel smelter in Finland (Credit: Boliden). . 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 . 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. Feb 2021 - Dec 202111 months. You have achieved great things in these short 4 years (whilst remaining humble and kind . UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. The Nikkelverk Operations. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. 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. It was 5.42 am on March 8 in London when the nickel market broke. 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. The nickel market was anything but calm. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Others took to social media. The giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. Still, the LME has weathered numerousscandalsbefore in its 145-year history, from a 1985crisis in the tin marketthat caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than $2 billion in losses. 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. The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. But its obligations dwarfed its available cash and bank credit. 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. The world's top five nickel-producing companies. The LME at the end of the day is a physical metal market, he says. Your email address will not be published. Its unclear whether he will get his way. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Our nickel operations are in Canada, Australia, Norway, and New Caledonia. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. 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. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. 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