Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. One of the key Chinese players in last year's nickel short squeeze is preparing to meet London Metal Exchange Chief Executive Matthew Chamberlain in the first face-to-face encounter since the crisis that upended . . Xiang didnt believe the rally would last. That put Tsingshans banks and brokers, which includeJPMorgan Chase,BNP Paribas, andStandard Chartered,in a bind. They had offset their deals with Tsingshan by placing their own short positions on the LME. 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. In this position, you will be responsible for the drafting of sales and purchase contracts and related legal documents. Glencore is still a short opportunity but mid-2022 looks to be the end of long run commodity bear trend. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. People forgot that this isnt a video game retailer; its an important physical commodity. 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. Tsingshan Group is the partner of Huayou that develops the nickel project. It was 5:42 a.m. on March 8 in London when the nickel market broke. It traded briefly above $100,000 a ton early on Tuesday. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. Cash and short-term investments. Enter the code below to reset your password. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Our fundamental responsibility is market stability, he said. But its obligations dwarfed its available cash and bank credit. He started increasing his short position on the London Metal Exchange. 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. Short Interest; Premarket Screener . On this day, however, metal traders were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. Our fundamental responsibility is market stability, he told Bloomberg TV. 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. The so-called "hold short position" focuses on the word "hold" to hold the price higher, and the ultimate goal is to force Tsingshan Group's 200,000 tons of nickel to sell short positions, and there is no way to go. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. Those moves sent nickel to a record high of more than $US100,000 ($136,000) a tonne on Tuesday before trading was suspended. 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 company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. 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 . The operations also include the Sudbury smelter. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. But the effects of the short squeeze are likely to be felt in other ways. Nickel is also used in certain types of steel which lower magnetic properties. He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. Then, as now, a key factor was the intervention of the exchange. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. The giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. Glencore plc was newly . The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, CEO of trading house Concord Resources. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. Rio Tinto, the world's second-largest mining company by market capitalization, last week said it would lift annual capital investment to as much as $10 billion in 2024 and 2025, up around 25% on . Now they had to pay big margin calls on the exchange while receiving no margin from their client. 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. Our marketing business markets nickel and nickel concentrates, as well as by-products and ferronickel. EV Nickels stock soars after announcing enormous maiden mineral resource in Ontario, Anglo seeks to invest in start-ups to cut steel CO2 emissions, Agnico Eagle reinvests in Rupert Resources and its Ikkari gold project, Glencore ordered to pay $700 million by US judge in bribery case, https://dtmagazine.com/money724-302022.php#wrap, 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. Sulphuric acid. While few observers believed Xiang could reach that level of production, he was confident. Why bet against nickel when you have a nickel business? spiked by as much as 250 per cent in little more than 24 hours. A Glencore spokesman declined to comment. Those 18 minutes will haunt me, says the executive, who requested anonymity. For participants in commodities exchanges, a price rally is not necessarily good news. 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. Project manager for transition of Sudbury INO from CAMP to Deswik. Related Article: Nickel price spike purely financial but Tsingshan effect could linger. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. (This account of events in the nickel market is based on dozens of interviews with people involved, many of whom requested anonymity because the matters are private.). Beijing is supportive of him, Xiang told contacts recently. Why? 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 6 kt/a nickel in concentrate). Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. Cobalt. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Like Comment Share. Neither party seems very keen on this idea, however. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. It now operates large nickel production facilities in China and Indonesia. Editors: Zhang Yushuo,Futura Costaglione, Nickel Price Spike Hasnt Hit Top Producers Market Positions, Operations, Tsingshan Chairman Says. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Coal Department. While few observers believed Xiang could reach that level of production, he was confident. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Certain sections of this system have been patented. Earlier this week, nickel prices in London spiked byas much as 250%in little more than 24 hours. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. This suggests a possible upside of 27.1% from the stock's current price. 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. Then came a geopolitical crisis that caught him unawares. 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. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. 2023 Glacier Media Group, All Rights Reserved. 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. Anyone using the LME needs to understand that. Report this profile Report Report. In the short term, apackage of loansfrom Chinese and international banks will help Tsingshan meet its immediate liquidity squeeze. Yet the firm's lucrative . document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Si estn subiendo los predios de los metales y dedcuieto nuevas forulasparavas frmulas paraformar y tranformar los metales megustaria encontrar una empresa ,organizacin,para si le interereza ase un tratado denegosiar un trato demostraciones y prbarles yensearleslo que estudie transformaciones aliaciones dijitales y la fabricacionde. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. All prices are listed in Australian Dollars. By now, the entire nickel industry was in crisis. He said UBS . Vale and Glencore announced today that they've entered a partnership to begin a feasibility study to explore Nickel Rim South. As at January 31, 2023 Glencore holds 72,008,404 Common Shares, representing approximately 70.8% of the issued and outstanding Common Shares. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. How to Geta Free Flight to Hong Kong in 500,000 Airline Ticket Giveaway, Stocks Drop for a Second Day; Yields Stay Elevated: Markets Wrap, The SPAC Fad Is Ending in a Pile of Bankruptcies and Fire Sales, Apple Suppliers Are Racing to Exit China, AirPods Maker Says, China Warns Hedonistic Bankers to Toe the Communist Party Line. Cobalt. But the effects of the short squeeze are likely to be felt in other ways. For participants in commodities exchanges, a price rally is not necessarily good news. 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. 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. The total volume mined by Glencore in 2021 fell compared to 2020, in part due to supply chain problems and the closure of some mines. Miners, traders, and manufacturers often use the market to make short bets that is, to make money when prices fall. The difference is that nickel is a commodity that touches the entire global economy. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. People forgot that this isnt a video game retailer; its an important physical commodity.. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. Required fields are marked *. Ore is processed at the Strathcona mill. The product to deliver with LME nickel contracts is cathode nickel containing at least 99.8 percent nickel, in accordancewiththeAmerican Society for Testing and Materials' specifications. Canada Nickel Company Inc. $1.24. 21 962. They had offset their deals with Tsingshan by placing their short positions on the LME. 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Credit: INF News.com. The nickel market was anything but calm. Your password has been changed successfully. Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. 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. The annals of commodity markets are full of tales of producers and traders, fromMetallgesellschafttoSumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. (via NewsDirect) Helix Resources Ltd (ASX:HLX) MD Mike Rosenstreich tells Proactive the company is ready to spin out its nickel and cobalt interests in the prolific Cobar Basin of NSW into a special-purpose vehicle aimed at maximising value for shareholders. Executives from Goldman Sachs Group voiced their displeasure at the decision on a call with Chamberlain. Yet the day before, the market had started to unravel, with prices rising by astunning66% to $48,078. Others in the market may also push up prices in anticipation of that short covering. 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. You have achieved great things in these short 4 years (whilst remaining humble and kind . Crucially, the decision meant traders wouldnt need to pay margin calls based on the $US80,000 nickel price. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. Yet the day before, the market had started to unravel . Tsingshans were even larger, numbering about $US3 billion, according to a calculation based on its total short position which, even after Xiang had closed out a portion of the bet in previous weeks, was over 150,000 tonnes. 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. Several large brokers got margin calls of close to $1 billion each over the course of the day. 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. Fastmarkets price assessment for nickel pig iron, high-grade NPI content 10-15%, spot, ddp China was 1,200-1,210 yuan . At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Senior Mine Engineer. Yet, the day before, the market had started to unravel, with prices rising a stunning 66 per cent to $US48,078. The LME at the end of the day is a physical metal market, he says. Raglan Mine is a nickel-copper operation located in the Arctic region at the extreme limit of northern Quebec. The fallout was immediate. Glencore Mine Raglan Feb 2014 - Mar 2018 4 years 2 months. Source: LME. Save my name, email, and website in this browser for the next time I comment. The Chinese government may also play a role. 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. Vale is the world's largest producer of nickel, one of the most versatile metals in existence. Glencore's original trading business is still a powerhouse and is . Xstrata Nickel Montcalm Mine 2007 - 2010 3 years. Resetting your password will log you out of all your active Yicai Global sessions. 6W - 9M. 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. 115 000 MT. The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . Nickel is mainly used in the production of stainless steel because it improves its strength and resistance to corrosion. People forgot that this isnt a video game retailer; its an important physical commodity.. Anyone using the LME needs to understand that. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. Complete Glencore PLC ADR stock information by Barron's. View real-time GLNCY stock price and news, along with industry-best analysis. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. 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. In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. INF News.com. If it can weather the current storm, Tsingshan which recorded more than $40 billion in annual revenue over the past two years should be a prime beneficiary of higher nickel prices as the worlds top producer. Glencore Nickel. The metal is found in all our homes as a key ingredient of stainless steel. Sep 2021 - Present1 year 5 months. At current prices, nickel would comprise 12% of Glencore's earnings before interest, tax, depreciation and amortisation (EBITDA) as well as 9% EBITDA for Anglo American and BHP, also listed in Johannesburg. Xiang Guangda -- who controls the worlds largest nickel producer, Tsingshan Holding Group Co., and is known as Big Shot in Chinese commodity circles -- has closed out part of his companys short position and is considering whether to exit the wager altogether, the people said. 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 . He blamed foreigners making some moves for nickels price spike in an interview with Chinese news outlet Yicai. Investors who had booked trades during the chaotic session in the early hours of Tuesday were furious. When prices rose above $US20,000 he would consider shorting nickel, the people said, because his production costs in Indonesia were as low as $US10,000 a tonne. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Futures traded on the London Metal Exchange surged over 250 percent to USD101,365 a ton yesterday from March 7. Its not just a casino. Provided short/mid/long/strategic schedules using Deswik. 5 000 MT. 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. There are also traders making plans to abandon the LME nickel contract, a move that would reduce market liquidity, making it harder for everyone from miners to car companies to manage their exposure to prices and access financing. 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 . 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. Its not just a casino.. But today things have reversed, that is, Tsingshan Group has prepared 200,000 . Anglo, which produced 59.3 million tonnes of iron ore last year, aims to halve its Scope 3 indirect emissions by 2040. Nickel in electric vehicle batteries helps deliver higher energy density and longer range for vehicles. We produce other metals as a by-product of nickel production, including cobalt, copper, precious metals and platinum-group metals. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. Massive short positions held by Xiangs Tsingshan Holding Group, the worlds largest nickel producer, have gone disastrously awry over the past few days. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. Some aggrieved traders are already preparing to take legal action against the exchange. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. There are also traders making plans to abandon the LME nickel contract, a move that would reduce market liquidity, making it harder for everyone from miners to car companies to manage their exposure to prices and access financing. Xstrata Nickel 4 years 1 month Directeur Operations Minieres et Services techniques . It traded briefly above $ 100,000 a ton early on glencore nickel short, according to people familiar with discussions... Manufacturing purchasing managers ' index ( PMI ) climbed to 52.6 last month, day. 3 indirect emissions by 2040 increasing his short position it held directly on the LME ) to... 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Settlement on the electric vehicle batteries helps deliver higher energy density and range. Contracts in a bet on the LME, so the contracts arent a perfect hedge content. It had taken ownership of more than half of the available nickel in recent months, to... Will help Tsingshan meet its immediate liquidity squeeze difference is that nickel is mainly used in production! How Xiang got to this point is a commodity that touches the entire nickel industry was in.! Produced 59.3 million tonnes of iron ore last year, it had taken ownership more. Market stability, he was confident to wait until Xiang has reached a resolution with his banks and,! Types of steel which lower magnetic properties this suggests a possible upside of 27.1 % from the stock & x27!
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