Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. 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. For Xiangs big short position, that was painful. By Lucy Battersby. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee . But while the short squeeze has weighed on Tsingshan's . 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. If it can weather the current storm, Tsingshan which recorded more than $US40 billion in annual revenue over the past two years should be a prime beneficiary of higher nickel prices as the worlds top producer. MMC Norilsk Nickel Recent Development 11.3 Glencore 11.3.1 Glencore Company Detail 11.3.2 Glencore Business Overview 11.3.3 Glencore Nickel Mining . In theory, there should be two options for this 200,000 tons of nickel short order: 1. 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. (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.). A Glencore spokesman declined to comment. That led to some missteps in Xiangs strategic decisions over his trading exposure, three of the people said. Short Term. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Tsingshan didnt respond to multiple requests for comment, and Xiang couldnt be independently reached. Required fields are marked *. The new venture Ionick Metals Ltd has executed a 12-month option agreement with Jodama Pty Ltd, which can pick up vendor and . spiked by as much as 250 per cent in little more than 24 hours. Beijing is supportive of him, Xiang told contacts recently. When the price of nickel shot skyward last week, it plunged the industry into chaos, triggering billions of dollars in losses and leading the LME to suspend trading for the first time in three decades. You will be able to view the post at https://dtmagazine.com/money724-302022.php#wrap in the Precious Metals section. 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. Nickel. 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 . 2017 - 2018 Yicai Global, Yicai Media Group. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. The giant commodity traderGlencore Plcalso had a position on the LME that would benefit from rising prices. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. Anyone using the LME needs to understand that. 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. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. Coal Department. Our fundamental responsibility is market stability, he said. View analysts price targets for GLEN or view top-rated stocks among Wall Street analysts. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. 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. 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. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, chief executive officer of trading houseConcord Resources Ltd.We had a frenzy based on speculation that accelerated on Monday and Tuesday. Neither party seems very keen on this idea, however. Cobalt. 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. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. But while the short squeeze has weighed on Tsingshan's . In late February and early March, Tsingshan, which had sales of 352 billion yuan ($77 billion) last year, paid its margin calls on time. 1w. For the LME to cancel nickel trades between willing buyers and sellers is unforgivable. 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. 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 . 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. During the fiscal year 2021, the Swiss-based company Glencore reported a nickel production of some 102.3 thousand metric tons. 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. . But much of Chinas academic and business community did not believe Russia would attack its neighbour. 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. At the time of the LME's trading halt, nickel had gained more than 230% in March. Since 1910, nickel and other metals have been refined, produced and exported from the production plant in Kristiansand. At current prices, nickel would comprise 12% of Glencore's EBITDA. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. At 8.15am, the screens stopped flashing, hours before the in-person pit trading session was even set to begin. The fallout was immediate. 21 962. How Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. Market speculation has it that Tsingshan has a short position of about 200,000 tons of nickel, which it cannot deliver due to a lack of spot product after being assailed and squeezed out by US and European commodity futures giants such as Glencore, China Securities Journal reported yesterday. Tsingshan Group is the partner of Huayou that develops the nickel project. 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. Why? 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. 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. Tsingshan is in touch with relevant parties and has the support of Chinese government departments and leaders, he added. Glencore Nikkelverk is an important part of the green shift. MT. Others in the market may also push up prices in anticipation of that short covering. The world's top five nickel-producing companies. The annals of commodity markets are full of tales of producers and traders, from Metallgesellschaft to Sumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Related Article: Nickel price spike purely financial but Tsingshan effect could linger. The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-19-era low. People forgot that this isnt a video game retailer; its an important physical commodity. Trafigura Lines Up Russia Aluminum Deal in Challenge to Glencore. Nickel rocketed to a record high above US$100,000 a tonne on Tuesday before trading was suspended; Tsingshan could have suffered well over US$2 billion of daily losses at the most extreme point of . Earlier this week, nickel prices in London spiked byas much as 250%in little more than 24 hours. For participants in commodities exchanges, a price rally is not necessarily good news. Already at an all-time high by 5:42 a.m., it lurched higher in stomach-churning leaps, soaring $30,000 in a matter of minutes. The nickel market was anything but calm. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. On average, they predict the company's share price to reach GBX 620.91 in the next year. 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. Others in the market may also push up prices anticipating that short covering. 1. The exchange had serious concerns about the ability of market participants to meet their resulting margin calls, raising the significant risk of multiple defaults. Despite that, Chamberlaininsisted to Bloomberg TVon March 9 that the solvency of the LME itself was never in doubt. Located in Kristiansand, Nikkelverk is the largest nickel refinery in the western world producing high-quality nickel and cobalt. Xiang isnt just a financial trader making paper bets on price moves. The head of one London metals brokerage recalls feeling sick as he watched the moves, realising what the spike in prices would mean for his company, the market, and the global metals industry. A market that many veterans simply describe as "broken." It's been three weeks since nickel was suspended on the London Metal Exchange after a . Nickel is mainly used in the production of stainless steel because it improves its strength and resistance to corrosion. The LME made a near-unprecedented decision. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Then on March 7, nickels price began its parabolic ascent, surging from $30,000 a ton to more than $50,000. Xiang didnt believe the rally would last. Why bet against nickel when you have a nickel business? The LME suspended nickel-market trading on Tuesday and the Shanghai Futures Exchangefollowed suita day later, after prices on Chinas top commodities bourse hit their daily upward limit. Its unclear whether he will get his way. A year after the short squeeze that brought the LME to the brink of collapse, the nickel market remains barely functional, with trading volumes sharply lower and prices regularly experiencing wild . . Having capacity but no inventory puts Tsingshan at a disadvantage, he said. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. The spike was driven in large part by a short squeeze centred on Chinese tycoon Xiang Guangda, who had amassed a big wager that nickel prices would fall through his company Tsingshan Holding Group. Stainless steel with nickel content is omnipresent, for example in buildings, bridges and kitchen appliances. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. Born in 1958, he started out making frames for car doors and windows in Wenzhou, in eastern China. Beijing is supportive of him, Xiang told contacts recently. Bloomberg. And that was just for the portion of the short position it held directly on the exchange about 30,000 tonnes. We produce some of the world's purest nickel. But today things have reversed, that is, Tsingshan Group has prepared 200,000 . Then, as now, a key factor was the intervention of the exchange. Nickel. Glencore Nikkelverk AS has a modern and complex processing system. 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