Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). A short position is created when a trader sells a security he does not own, with the intention of repurchasing it later at a lower price. It did not provide any other details, such as how long the standstill period would last. 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The arrangement will also help the pave the way for the London Metal Exchange to restart nickel trading, they said. It should be mentioned that nickel had already rallied to $25,000 in January before easing off by the end of the month. Known as "Big Shot" in China for his imposing presence in the metal industry, Xiang Guangda, the founder of the world's biggest nickel and stainless-steel firm, Tsingshan, had amassed a short position of more than 150,000 tonnes of nickel, which was about five times the volume of the metal held by the LME and equivalent to approximately Everything changed when Russia invaded Ukraine. For a while, it wasunclear which view of the market would prevail. Moscow's invasion of Ukraine and the west's moves to sanction Russia, a key major supplier, have electrified an already bullish nickel market. 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. This is lower than Nickel Mines' expected profit margin for nickel in matte at current prices. How to Geta Free Flight to Hong Kong in 500,000 Airline Ticket Giveaway, Apple Suppliers Are Racing to Exit China, AirPods Maker Says, Stocks, Bonds Drop as Traders Weigh Data, Fedspeak: Markets Wrap, Microsoft Expands Game Pass as Regulators Fret Over Activision Deal, Cash Is Paying More Than Traditional Stock-Bond Portfolio. ), by sales channel (Direct Channel, Distribution Channel), by player (Shandong Xinhai Technology, Tsingshan Holding Group, Eramet, Linyi Yichen Alloy, Jiangsu Delong Nickel Industry . Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Pada titik ini, posisi short Tsingshan dibekukan. The creditors involved include both local and intentional banks, including J.P. Morgan and China Construction Bank . 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. 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. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. This copy is for your personal, non-commercial use only. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. At the center of the action is Chinese nickel titan Tsingshan Holding Group, the worlds biggest producer of a metal used in stainless steel and .css-1h1us5y-StyledLink{color:var(--interactive-text-color);-webkit-text-decoration:underline;text-decoration:underline;}.css-1h1us5y-StyledLink:hover{-webkit-text-decoration:none;text-decoration:none;}electric-vehicle batteries. The major market events for the week ahead right in your inbox. The war in Ukraine surprised the market and led to a price surge, pushing Tsingshans margin to billions as it rose in-line with nickel prices. Plus, 60% off clearance with American Eagle promo code, Wayfair promo code: 10% off any single purchase, Kohl's promo code: 30% off for Kohl's Rewards Members, 50% off + free delivery on any order with DoorDash promo code. One of the world's biggest nickel and stainless steel producers, Tsingshan started building a short position -- a wager that prices will fall -- in the nickel market last year. . Prices exploded, thanks mainly to one companyindeed, one man. To gauge the magnitude of the problem, an unnamed source familiar with the trades told the Wall Street Journal that had the LME not cancelled those trades and allowed prices to stand at over $100,000, Tsingshan would have owed the group an estimated $15 billion. Tsingshan debacle exposes weak underbelly of LME. The current events are unprecedented, LME said in a notice. The broker was able to settle the margin calls on Tuesday after several clients, including Tsingshan, got loans to cover their positions, one of the people said. The London nickel market has been closed since last Tuesday morning, when the exchange intervened after prices spiked as much as 250% in two days, and the standstill announced by Xiangs Tsingshan Group Holding Co. could provide the certainty needed to restart trading. The nickel market was anything but calm. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. read more. 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. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, 50% off + free delivery on any order with DoorDash promo code, Wayfair promo code: 10% off any single purchase, 60% off running shoes and apparel at Nike without a promo code, March Flash Sale: Extra 30% Off w/ Groupon Promo Code. 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. Tsingshan's were even larger, numbering roughly US$3 billion, according to a Bloomberg calculation based on the company's total short positionwhich, even after Xiang . Still, the LME has weathered numerousscandalsbefore in its 145-year history, from a 1985crisis in the tin marketthat caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than US$2 billion in losses. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Yet the day before, the market had started to unravel, with prices rising by astunning66 per cent to US$48,078. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. A stressful week in markets got even worse for some metals traders when the main exchange's software misfired by generating erroneous margin calls, adding to the chaos at a time when brokers . Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact It decided to cancel all the trades that took place on Tuesday morningUS$3.9 billion of them, according to a Bloomberg calculation. Nickel prices on the LME jumped to record highs above $100,000 a tonne on March 8 as Tsingshan bought large amounts to reduce its short positions in the metal, which is used to make stainless steel and electric vehicle batteries. The majority of retail investor accounts lose money when trading CFDs. We expect the EBITDA margin to be around . This market frenzy all came to a head on March 8, when the LMEhaving allowed nickel prices to surge by around 250 percent in just a couple of days and reach an all-time high of $101,365/metric tonne (mt) in intra-day trading, which was more than double the $48,078/mt at which it closed the previous daysuspended all trading of nickel. Sanctions being implemented by Western powers against Russia over the invasion of its neighbour raised immediate concerns over the global supply of nickel, a metal that is primarily used around the world to make stainless steel and batteries and of which Russia accounts for around 10 percent of global supply. The exchange then retroactively wiped out $3.9 billion worth of transactions made before the suspension to demonstrate that nickel prices had stopped reflecting the underlying physical market. The Wall Street Journal, which previously reported the talks, also said Standard Chartered (STAN.L) and BNP Paribas (BNPP.PA) were among the banks looking to reach agreement. However, for business days 7th and 8th March, they would remain at . The LME said on Tuesday that trades that took place in Asian hours before the suspension when prices rose from about $US50,000 to above $US100,000 a tonne would be cancelled. Remember, when prices move up, traders like Xiang who have sold futures contracts face margin calls; they must put up more cash to cover potential losses. Tsingshan is also NIC's majority shareholder with a 21.15% stake through Shanghai Decent Investment. Based on the close on Friday night at $29,130, the LME were raising initial margins to a prudent 7.72% of the contract value. 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. All quotes delayed a minimum of 15 minutes. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-era low. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Xiang didnt believe the rally would last. But this week the rally became a melt-up, with prices surging as much as 250 per cent in little more than 24 hours, to an all-time high of $US101,365 a tonne. Why? LONDON (Reuters) -- China's Tsingshan Holding Group has reached an agreement with banks under which they will not make margin calls on or close out the producer's nickel positions on the London . Nickel short interest was created by Tsingshan. articles a month for anyone to read, even non-subscribers! Tsingshan is also a nickel miner and operates nickel pig iron mines and production facilities. LONDON, March 14 (Reuters) - China's Tsingshan Holding Group has reached an agreement with banks under which they will not make margin calls on or close out the producer's nickel positions on the London Metal Exchange (LME), the company said on Monday, a move sources said should help calm the market. 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 war in Ukraine surprised the market and led to a price surge, pushing Tsingshan's margin to billions as it rose in-line with nickel prices. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. The metal is found in all our homes as a key ingredient of stainless steel. One of the sources said Tsingshan's bets on lower nickel prices had amounted to around 300,000 tonnes at an average price between $18,000 and $19,000 a tonne. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. LME brokers and their clients were hit with margin call after margin call. In a squeeze, rising prices put traders betting on a drop in an ever-tougher financial position, forcing them or brokers and banks doing business on their behalf to buy the asset, a trade known as short covering that can drive prices even higher. When it was flying towards US$100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerage Bands Financial Ltd. and a former LME board member. 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. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. The LME suspended nickel trading in the early trading session on March 8 after prices more than doubled, breaching $100,000/mt mark and briefly reaching a record high of $101,365/mt. 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. 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. While Mark Thompson, executive vice-chairman at mining-development company Tungsten West, tweeted: The LME is now very likely going to die a slow, self-inflicted death through the loss of confidence in it and its products.. Tsingshan accounted for about half that amount. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. The simple fact here is that we did not have visibility over the size of the risk, Matthew Chamberlain, the LMEs chief executive, also stated. Despite that, reserves that can be economically mined are limited. But its obligations dwarfed its available cash and bank credit. Some think this could herald the end of the exchange itself. 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 record rally fuelled by the conflict . If you are considering investing or trading nickel, its important to do your own research. Join the 500.000+ traders worldwide that chose to trade with Capital.com, Also you can contact us: This weeks spike in prices has played out principally on the LME, and many traders expect the price to return to more normal levels once the margin call chaos has been resolved. 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