Nickels price moved sharply higher in the week after Russias military invasion. Then, as now, a key factor was the intervention of the exchange. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. 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. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Cobalt. Now, the traders watched with a mixture of horror and grim fascination as the price went skyward. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. A Glencore spokesman declined to comment. 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. Your email address will not be published. Shares in metal recycler Sims Metals hit an 11-year high of $19.55 today following a price target increase by UBS analyst Lee Power on Tuesday from $18.90 to $20.30. On Monday, a week after trading had been suspended, Xiang was close to securing a loan facility from JPMorgan Chase and other banks that would allow him to maintain his short position and could lead to the market reopening. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. People forgot that this isnt a video game retailer; its an important physical commodity.. 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. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. 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. Just after 6am, the price of nickel passed $US100,000 a tonne. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. At current prices, nickel would comprise 12% of Glencore's EBITDA. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. But while the short squeeze has weighed on Tsingshans short-term cash flows, strong nickel prices are to its advantage in the long run. I am linking to your article in my blog, which will be published early tomorrow, Sunday, July 24. Hes in the physical nickel business. Tsingshan Group placed a short nickel order, and the matter of being shorted by the opponent was brushed off. Nickel Rim South Mine. He was awakened by a phone call at 5:30 a.m. The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. Tsingshans were even larger, numbering roughly $3 billion, according to a Bloomberg calculation based on the companys total short positionwhich, even after Xiang had closed out a portion of the bet in previous weeks, was over 150,000 tons. On average, they predict the company's share price to reach GBX 620.91 in the next year. Your password has been changed successfully. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. In the short term, apackage of loansfrom Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. Tsingshan needs to increase the contract margins or roll over the futures if it decides to keep the contracts, which would require a huge amount of cash, an analyst told Yicai Global. INF News.com. 2023 Glacier Media Group, All Rights Reserved. . Follow the topics, people and companies that matter to you. LMEs Chamberlain defended cancelling the trades. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Then on March 7, nickels price began its parabolic ascent, surging from $US30,000 a tonne to more than $US50,000. (Podcast). By now, the entire nickel industry was in crisis. Nickel prices usually move a few hundred dollars per tonne in a day. It was 5.42 am on March 8 in London when the nickel market broke. Glencore Nickel. 2017 - 2018 Yicai Global, Yicai Media Group. The metal is found in all our homes as a key ingredient of stainless steel. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. 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 LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. It traded briefly above $100,000 a ton early on Tuesday. Glencore's disclosure follows a forecast earlier this month that there needs to be greater investment in nickel production, even though the short-term picture suggests there will be a glut of the metal. spiked by as much as 250 per cent in little more than 24 hours. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. 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. 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 . Mid Term. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, CEO of trading house Concord Resources. . 1. At 1 a.m. on Tuesday, the market opened. Executives fromGoldman Sachs Group Inc.voiced their displeasure at the decision on a call with Chamberlain. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. Xiang isnt just a financial trader making paper bets on price moves. 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. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. Not everyone shared his pessimism about prices. Glencore Ordered to Pay $700 Million in US Over Bribery Case (Bloomberg) -- Glencore Plc was ordered by a federal judge in New York to pay $700 million as a criminal punishment for a global bribery scheme orchestrated by the Swiss-based commodities trading and mining giant.Most Read from BloombergElon Musk Regains His Spot as the World's Richest PersonHow to Get a Free Flight to Hong Kong in . A Glencore spokesman declined to comment. 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. The metal is found in all our homes as a key ingredient of stainless steel. 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. For the LME, the future isunclear. 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. Tsingshan Holding Group was looking at an $8 billion trading loss after nickel prices soared, The Wall Street Journal reported Tuesday . The company has a diversified basket of commodities, including nickel, which is famous because of electric vehicles. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. Glencore's original trading business is still a powerhouse and is . While few observers believed Xiang could reach that level of production, he was confident. this week's short squeeze is nonetheless likely to push . Activity . gold and silver, amounted to 809 and 31 516 tons, respectively. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the $80,000 nickel price. The price was frozen, below the record high but still at $US80,000 a tonne. 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. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. Tsingshan accounted for about half that amount. Your email address will not be published. Glencore Headquarters. 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. Among them were some of the biggest names on Wall Street. 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. While few observers believed Xiang could reach that level of production, he was confident. The latest price was A$0.04 (25-minute delay). From a contractual perspective, you may be . Once its industrial complex reaches peak p. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. Glencore-backed Leeuwin ready to set sail. 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. Everything changed when Russia invaded Ukraine. Save my name, email, and website in this browser for the next time I comment. For most of the past decade, theyd traded between $US10,000 ($13,700) and $US20,000. Vale and Glencore announced today that they've entered a partnership to begin a feasibility study to explore Nickel Rim South. Then, as now, a key factor was the intervention of the exchange. Short Interest; Premarket Screener . Now they recognised that they had to suspend trading. But much of Chinas academic and business community did not believe Russia would attack its neighbour. Some aggrieved traders are already preparing to take legal action against the exchange. He was awakened by a phone call at 5.30am. Back Submit. 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 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. Others in the market may also push up prices anticipating that short covering. Last modified on Wed 15 Feb 2023 06.23 EST. While Russias nickel exports havent been targeted by sanctions, US and European buyers have nonetheless sought alternatives to Russian sources. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. 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. 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