UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. 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 still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. In the short term, a package of loans from Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. Nickel. 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. Harjavalta nickel smelter in Finland (Credit: Boliden). 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 . Senior Mine Engineer. Glencore will give almost 6bn to shareholders after the mining and commodities company reported record pre-tax profits of more than 28bn in 2022 . 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. Xiang himself had little interest in international news, the people said, and the growing speculation over a possible war was hard to track in China. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. He started increasing his short position on the London Metal Exchange. The LMEs history dates back to the early 19th century, when metal traders drew a circle in the sawdust on the floor of the Jerusalem Coffee House in the City of London. 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. Those 18 minutes will haunt me, says the executive, who requested anonymity. When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. Back Submit. Long Term . And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its Covid-era low. 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. 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 is owned and operated by Glencore Canada Corporation.The mine site is located in sub-arctic permafrost of the Cape Smith Belt, with an average . Baar, Switzerland 29 July 2022. Your email address will not be published. At the time of the LME's trading halt, nickel had gained more than 230% in March. 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. He was awakened by a phone call at 5:30 a.m. The LME at the end of the day is a physical metal market, he says. In the short term, apackage of loansfrom Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Nickel. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Anyone using the LME needs to understand that. LMEs Chamberlain defended cancelling the trades. Formerly called Companhia Vale do Rio Doce, Vale is a diversified multinational metals and mining company founded in 1942, and headquartered in Rio de Janeiro, Brazil. Cash and short-term investments. 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. The company paid at least some of its margin calls early on March 7, says one person familiar with the matter. 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. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. The LME made a near-unprecedented decision. #GlencoreCopper #MetalOfTheFuture https://lnkd.in/eEqPmJn9. In turn, the extraction of precious metals by the company in 2021, i.e. And once again, this short squeeze racked up billions in losses for those involved. . 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. 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. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Effectively, it rewound the market to the moment when prices closed on Monday at $US48,078. Xiang Guangda, the billionaire owner of Tsingshan Holding Group. Then, as now, a key factor was the intervention of the exchange. 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. Required fields are marked *. Glencore Chief Executive Officer, Gary Nagle: "Overall production was mixed period-over-period (5 commodities up and 5 down in the table below), reflecting the Ernest Henry (copper/gold) and Bolivia (zinc) portfolio disposals, and geotechnical and processing challenges at Katanga, offset by improved cobalt, nickel and ferrochrome production levels and the . Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. Save my name, email, and website in this browser for the next time I comment. But its obligations dwarfed its available cash and bank credit. At 1am on March 8, the market opened. 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. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . this week's short squeeze is nonetheless likely to push . Overseas market players have made some moves, Xiang said, driving up nickel prices in the last two days. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. 2W - 6W. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Vale - 208,000 metric tonnes. While Russias nickel exports havent been targeted by sanctions, US and European buyers have nonetheless sought alternatives to Russian sources. 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. 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. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Certain sections of this system have been patented. Were working to restore it. We produce some of the worlds purest nickel. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. 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. Glencore-backed Leeuwin ready to set sail. Sulphuric acid. He said UBS . A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. Tsingshan accounted for about half that amount. The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. 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. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. 39 000 MT. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee . It was 5:42 a.m. on March 8 in London when the nickel market broke. Chinese tycoon behind nickels big short has power to fuel more drama. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. Nickels price moved sharply higher in the week after Russias invasion. But the effects of the short squeeze are likely to be felt in other ways. Born in 1958, Xiang founded his business more than 30 years ago as a workshop making frames for car doors and windows in Wenzhou, eastern China. 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 two major mining companies in Sudbury are working together to . Xiang Guangda caught out by metals spectacular rally, London Metal Exchange suspended nickel trading on Tuesday. 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