Given that JPMorgan was reported as the biggest trading counterparty against which Tsingshans nickel trades were made, the US bank led the subsequent agreement to arrange a rescue credit facility, secured from various lenders, including China Construction Bank (CCB), to help the Chinese nickel giant address its immediate liquidity squeeze. The limits also meant that those buyers seeking to unwind their positions had to join a long queue of sellers waiting to complete their transactions. Tsingshan has said it has secured facilities with its consortium banks and will exit its position in an orderly manner. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. The London Metal Exchange initially announced rule changes late Monday in respond to a daily spike of as much of 90% (Reuters) Nickel, used in stainless steel and electric-vehicle batteries . read more. Distribution and use of this material are governed by 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. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. He was awakened by a phone call at 5:30 a.m. 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. Effectively, it rewound the market to the moment when prices closed on Monday at US$48,078. The LME did not put it into default, instead giving it more time to pay. Those past scandals forced reforms on the exchange. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . It's been under growing pressure to meet the payments in recent days, the. Exchanges. See here for a complete list of exchanges and delays. Tsingshan's 2022 nickel equivalent output is estimated at 850,000 tonnes. Given nickel matte prices of roughly $15,421/t May 18, we calculate a profit margin of $5,571/t for Tsingshan's nickel in matte. Three-month nickel on the LME more than doubled to over $100,000 a ton yesterday before the LME stepped in to halt trading of the metal. Late Tuesday, the exchange said it anticipates trading wont resume before Friday. The Companys registered office is at Bahamas Financial Centre, 3rd Floor, Shirley and Charlotte Street, P.O. LME CEO Matthew Chamberlain says suspending nickel trading and canceling the trades on the London Metal Exchange was the right decision for the sake of market stability. For non-personal use or to order multiple copies, please contact Last chance for up to $40 off TurboTax, All Jeans + Pants 25% off! While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. The major market events for the week ahead right in your inbox. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. Tsingshan, a privately-held company, and other 'shorts' faced larger margin calls on their short bets after the LME raised the amount of money companies had to deposit with it to cover their exposure to falling nickel prices, the three sources said. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. The move is a characteristic display of self-confidence from Xiang Guangda, the owner of Tsingshan Holding Group Co., and means that the nickel market could be set for more fireworks once it reopens. News Corp is a global, diversified media and information services company focused on creating and distributing authoritative and engaging content and other products and services. The XM Research Desk, manned by market expert professionals, provides live daily updates on all the major events of the global markets in the form of market reviews, forex news, technical analysis, investment topics, daily outlook and daily vidoes. The metal is found in all our homes as a key ingredient of stainless steel. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. It had sold nickel forward on the markets, betting on the price going down, not up. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. Assessing the Incremental Costs of Regulation and Supervision Faced by Next-Gen Operating Models for Bankers and Advisors, Macroprudential Policy and Real Estate Funds. Among them were some of the biggest names on Wall Street. That would come on top of any losses incurred by the tycoon since he began building the short position late last year through closely held Tsingshan. Xiangs short position has now racked upbillions of dollars in losses. Mr Xiang began building the short position in part because he wanted to hedge rising output, but also because he believed the rally in nickel prices would fade this year. The price move on March 8 created a systemic risk to the market, the LME said two days later. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. Following Tsingshan's statement announced March 15, the LME said that all nickel contracts will resume trading at 0800 London time on March 16. This report studies the Ferronickel market, covering market size for segment by type (Ferronickel (Nickel15%), Ferronickel (Nickel15-25%), etc. Nickel prices trading on the London Metal Exchange (LME) has fallen significantly over the past few months as restrictions cooled the turbulent market, pulling the metal down from its record high of above $100,000 a tonne on 8 March. Tsingshan and others had to buy . Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. ), by application (Stainless Steel Industry, Electronics Industry, etc. This is lower than Nickel Mines' expected profit margin for nickel in matte at current prices. Just after 6 a.m., the price of nickel passed US$100,000 a ton. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. Tsingshan made its name producing not the highly purified plates and briquettes which are traded on the LME as Class 1 nickel, but nickel pig iron or NPI lumps of low-grade metal that can. It did not provide any other details, such as how long the standstill period would last. Continue reading your article witha WSJ subscription, Already a member? Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. On Monday, one of Tsingshans brokers a unit of a state-owned Chinese bank failed to pay hundreds of millions of dollars in margin calls on its nickel positions. The arrangement will also help the pave the way for the London Metal Exchange to restart nickel trading, they said. LONDON, March 8 (Reuters) - China's Tsingshan Holding Group bought large amounts of nickel to reduce its short bets on the metal and its exposure to costly margin calls, turbocharging a. The fear was that Tsingshan could not make its margin calls, interim payments to parties on the other side of the trade. And it was already heading higher once more in February prior to the outbreak of war in Eastern Europe, partly on renewed interest in the metal as the global economy continued its recovery from the COVID-19 crisis as well as buoyant demand for electric vehicle batteries, of which nickel is a principal component. Erin Jonasson. An employee. Perhaps whats most surprising is that this nickel squeeze happened within a market that had, for the last few years, been comparatively sedate, with rangebound trading rarely breaking above the $20,000/metric tonne (mt) mark on the upside before 2022. The new historic high is nearly twice the previous record of $51,600 in 2007. 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. Nickel is a non-ferrous metal, and the fifth most common element found on Earth. Opinion. ", Britain's Financial Conduct Authority (FCA) and the Bank of England are talking to the London Metal Exchange about the resumption of a fair and orderly market in nickel, the FCA said on Monday in response to a request for comment. 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. Copyright | For the fourth quarter, the company expects to generate "high single-digit. Many traders expect the price to return to more normal levels once the margin call chaos has been resolved. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, chief executive officer of trading house Concord Resources Ltd. We had a frenzy based on speculation that accelerated on Monday and Tuesday. read more. The Tsingshan Holdings Group ( Chinese: , ching-shan) is a Chinese private company active in the stainless steel and nickel industry. call +44 20 3097 8888 support@capital.com. The metals industry, financial regulators and Chinese officials rushed to resolve a crisis in Londons nickel market, which remained on ice after an ill-fated trade sparked mammoth price gains and billions of dollars of losses. It marked the first major market failure sinceRussias invasion of Ukrainejolted global markets, showing how the removal of one of the worlds largest exporters of resources from the financial system in the space of weeks is having ripple effects across the world. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. Many producers, traders, and users of nickel with short positions on the LME were facing margin calls many times larger than they were prepared for. 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. The price was frozen, below the record high but still at US$80,000 a ton. In response to the crisis, the LME suspended nickel trading on 8 March and cancelled all trades executed on or after 00:00 UK time on 8 March 2022 in the inter-office market and on LMEselect (LME online trading platform) until further notice.. 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. The material provided on this website is for information purposes only and should not be understood as an investment advice. If nickel prices stay lofty it could complicate the energy transition with electric vehicle batteries costing more to produce. Mampukan Tsingshan bertahan? Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. . Tsingshan has secured credit promises from banks including JPMorgan Chase & Co. and China Construction Bank that could allow it to avoid defaulting on its margin calls, Bloomberg reported. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. It granted extra time on March 7th to CCBI Global, a Chinese broker for Tsingshan that is a member of the LME, to raise funds from its state-owned parent, China Construction Bank, to cover. 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. Save my name, email, and website in this browser for the next time I comment. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Terms & Conditions Finance Publishing Nickel, used in stainless steel and electric-vehicle batteries, surged as much as 250% in two days to trade briefly above $100,000 a ton early Tuesday. Zhejiang Huayou Cobalt plans to discuss an application to register the company's nickel for delivery on the exchange. Its been under growing pressure to meet the payments in recent days, the people said. Brokers, in turn, must hold margin at the clearing house, LME Clear. President Tayyip Erdogan indicated on Wednesday that elections will be held on May 14, sticking to his previous plan for the vote with a date just over three months after a devastating earthquake killed more than 45,000 people in Turkey. read more. Founded back in 1877 and now owned by Hong Kong Exchanges & Clearing (HKEX), the LME performs a critical role in determining benchmark prices for the global metals industry and provides a liquid market venue for financial institutions to make money. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Moscow's invasion of Ukraine and the west's moves to sanction Russia, a key major supplier, have electrified an already bullish nickel market. Chinese nickel giant at center of action, Tsingshan, received financial lifeline from banks to help meet margin calls related to $8 billion in paper losses Since Russia invaded Ukraine at the. Matthew Chamberlain, the LMEs chief executive officer, had stayed up to watch. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Beijing is supportive of him, Xiang told contacts recently. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. WATCH: Trading on LME is now set to resume Wednesday. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. Even at that level, clients of LME brokers had failed to pay some US$500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. For participants in commodities exchanges, a price rally is not necessarily good news. 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