Ore is processed at the Strathcona mill. 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. Finance > Capital-markets. 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. Cobalt. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. Trafigura Group sold cargoes of nickel it now believes may not have contained any of the metal to buyers including a US trade finance firm and a state-owned Jack Farchy on LinkedIn: Trafigura's Non-Existent Nickel Was Bought by a US Firm 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. LMEs Chamberlain defended cancelling the trades. 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. Mark Hansen, chief executive officer of Concord Resources, Help using this website - Accessibility statement. Now they recognised that they had to suspend trading. 6 kt/a nickel in concentrate). Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. It traded briefly above $100,000 a ton early on Tuesday. Massive short positions held by Xiangs Tsingshan Holding Group Co., the worlds largest nickel producer, have gone disastrously awry over the past few days. Xiang didnt believe the rally would last. Everything changed when Russia invaded Ukraine on February 24. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. But its obligations dwarfed its available cash and bank credit. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. 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. The fallout was immediate. A Glencore spokesman declined to comment. Glencore's Koniambo mine is located in New Caledonia, mining nickel in this French territory in the South Pacific. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. In this position, you will be responsible for the drafting of sales and purchase contracts and related legal documents. For most of the past decade, theyd traded between $10,000 and $20,000. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. As the trend towards e-mobility grows, this versatile metal is increasingly needed to produce high-performance batteries. Why? Then, as now, a key factor was the intervention of the exchange. Like Comment Share. 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. Qingshan Holding Group,Nickel,Futures Contract, Paris Looms as Europe's Largest Financial Market, French Economy Minister Says, Alibaba, Spain's El Corte Ingles Department Store Ally on Digital Retail, China's GEM to Supply 100,000 Tons of Lithium Battery Materials to Korea's Ecopro, Toshiba Home Appliances Returns to Profit After Midea Takeover, Chairman Says, How AR is Poised to Change Business Forever. The company had a further 120,000 tonnes or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase and Standard Chartered. Xiang isnt just a financial trader making paper bets on price moves. 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. https://bbgvod-azure-us-east1-zenko.global.ssl.fastly.net/vod/vod/m/ODg0NDM2Mg/Q2xvdWRfNTgyODY2/3fb888db-fa8e-42e4-b488-726dae69584b_150.mp4, Nickel price spike purely financial but Tsingshan effect could linger, EV Nickels stock soars after announcing enormous maiden mineral resource in Ontario, Iron ore price jumps on China data, bullish steel demand outlook, Copper price rises as Chinas economy shows strong recovery, Gold price hits 1-week high on robust China economic data, 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. 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 wild rise of nickel drew comparisons to the short squeezes in meme stocks such as GameStop Corp. that gripped retail investors for much of last year. 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. The show will focus on global macro issues with a middle eastern context, provide expert analysis of major market moving stories and speak with the biggest newsmakers in the region. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. 92 000 MT. The head of one London metals brokerage recalls feeling sick as he watched the moves, realizing what the spike in prices would mean for his company, the market, and the global metals industry. 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. Soaring coal and metal prices powered Swiss mining and trading firm Glencore to a net income of $5 billion in 2021, a notable recovery from its $1.9 billion loss in 2020. Nickel is also used in certain types of steel which lower magnetic properties. China imported 3.44 million tonnes of NPI/ferro-nickel in 2020, up by 79.89% year on year, while Indonesia's material imports came to 2.73 million tonnes in 2020, up 99.6% from a year earlier, according to China Customs data. For a while, it was unclear which view of the market would prevail. Nickel prices usually move a few hundred dollars per ton in a day. Now they had to pay big margin calls on the exchange while receiving no margin from their client. . . Perth, Western Australia, Australia. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. . 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. He was awakened by a phone call at 5:30 a.m. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. Project manager for transition of Sudbury INO from CAMP to Deswik. The dollar hit a one-week low earlier Wednesday after China's yuan gained. Iquique Chile Falconbridge . A Glencore spokesman declined to comment. Nickels 250% price spike in little more than 24 hours plunged the industry into chaos, triggering billions of dollars in losses for traders who bet the wrong way and leading theLondon Metal Exchangeto suspend trading for the first time in three decades. Because nickel resists high temperatures, it is used in special steel and superalloys intended for aircraft engines, among other applications. 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. Mark Hansen, chief executive officer of Concord Resources. Earlier this week, nickel prices in London spiked by as much as 250 per cent in little more than 24 hours. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. But the effects of the short squeeze are likely to be felt in other ways. 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. Glencore is a leading producer and marketer of nickel, as well as a recycler of nickel-containing materials such as batteries. The latest price was A$0.04 (25-minute delay). Glencore has a short interest ratio ("days to cover") of 0.2, which is generally considered an acceptable ratio of short interest to trading volume. 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. Others in the market may also push up prices in anticipation of that short covering. LME brokers and their clients were hit with margin call after margin call. 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. In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. Those past scandals forced reforms on the exchange. Poseidon Nickel stock opened the day at A$0.04 after a previous close of A$0.04. . 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. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. Resetting your password will log you out of all your active Yicai Global sessions. Last modified on Wed 15 Feb 2023 06.23 EST. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. For participants in commodities exchanges, a price rally is not necessarily good news. Nickel prices usually move a few hundred dollars per ton in a day. The LME made a near-unprecedented decision. They include: Koniambo is a large-scale integrated ferronickel mining and processing complex. Sep 2021 - Present1 year 5 months. Then on March 7, nickels price began its parabolic ascent, surging from $US30,000 a tonne to more than $US50,000. LME chief executive Matthew Chamberlain had stayed up to watch. gold and silver, amounted to 809 and 31 516 tons, respectively. For the LME, the future isunclear. Pemex Reports $9.4 Billion Loss as AMLO Fails to Revive Output . Poseidon Nickel is listed on the Australian Securities Exchange (ASX) and has a trailing 12-month revenue of around AUDC$256,000. All prices are listed in Australian Dollars. 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. He said UBS . Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. Wayne has over 20 years of operational management experience of complex hydrometallurgical plants, specialising in transformation of operational and . 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. People forgot that this isnt a video game retailer; its an important physical commodity. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. But while the short squeeze has weighed on Tsingshan's . Short Term. 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. Most analysts sided with Xiang, at least in the medium term, believing that nickel production led by Tsingshan and its competitors in Indonesia would outpace demand. In theory, any price changes on the futures market should offset price changes in the value of the inventories as long as the traders can meet their margin calls. It was 5:42 a.m. on March 8 in London when the nickel market broke. Others took to social media. Evaporating liquidity. He was awakened by a phone call at 5.30am. 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. Then came a geopolitical crisis that caught him unawares. Some market rumors are circulating that Glencore might squeeze Tsingshan on LME Nickel for its 60% stake in a nickel mine in Indonesia. Senior Mine Engineer. MT. Report summary. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. Canada Nickel Company Inc. $1.24. The nickel market was anything but calm. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Its not just a casino. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor 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. 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. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. 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. The price was frozen, below the record high but still at $US80,000 a tonne. 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. Worse, the chaos was spreading to other markets: Zinc prices spiked 15 per cent in a few minutes to a record high, only to collapse again. 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. 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. 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. Some think this could herald the end of the exchange itself. Glencore is still a short opportunity but mid-2022 looks to be the end of long run commodity bear trend. Things seemed calm at first: Prices were hovering around $50,000 a ton, and he went to bed. Our nickel operations are in Canada, Australia, Norway, and New . 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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. But much of Chinas academic and business community did not believe Russia would attack its neighbour. The LME canceled transactions and suspended trading Tuesday after nickel's price jumped 90% to $55,000 per metric ton Monday, and then leapt again to a record high of $100,000 the next day . Raglan Mine is a large nickel mining complex in the Nunavik region of northern Quebec, Canada.It is located approximately 100 kilometres (62 mi) south of Deception Bay. To more than 24 hours of day, bleary-eyed traders are typically just glancing at prices they. Short betsthat is, to make money when prices fall at a $ 0.04,. Listed on the exchange would ideally prefer to wait until Xiang has reached a resolution his! Stake in a day will be responsible for the LME to cancel nickel trades willing... 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