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 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. Assessing the Incremental Costs of Regulation and Supervision Faced by EU Banks Compared to Their US Peers, Interview with Mr. lvaro Saboro, Chief Executive Officer, Grupo Financiero BCT. Distribution and use of this material are governed by 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 price continued to climb higher as one of the world's largest nickel producers, Russia decided to invade Ukraine. (Bloomberg) A unit of China Construction Bank Corp was given extra time by the London Metal Exchange to pay hundreds of millions of dollars in margin calls it missed on Monday amid an unprecedented rise in nickel prices, in this case According to people familiar with . Why is nickel going up so drastically in a short period of time? By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. The extra charge kicks in at close of business on Tuesday. 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. They had offset their deals with Tsingshan by placing their own short positions on the LME. Tsingshan, who pioneered the Rotary Kiln Electric Furnace (RKEF) process to produce low-cost nickel pig iron (NPI), is now the dominant player in the Indonesian NPI industry and a global leader in NPI processing technology, including having implemented the Argon Oxygen Decarburisation process which incorporates the direct hot charging of NPI into the stainless steel production process for a . For the LME, the future isunclear. But its obligations dwarfed its available cash and bank credit. Late on Monday, the LME also allowed traders to defer delivery obligations on all its main contracts -- including nickel -- an unusual step that underscores the pressure on commodities generally from the moves to isolate Russia economically. The current events are unprecedented, LME said in a notice. Nickel short interest was created by Tsingshan. Matthew Chamberlain speaks on "Bloomberg Markets: Europe.". Forbes places Xiang's real-time net worth at $1.2 billion. 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. Then in . According to industry members association International Nickel Study Group (INSG), stainless steel production accounts for over two-third of nickel demand in 2020, while the use in batteries for EVs remained low at 6%. 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. "In the course of the standstill period, Tsingshan and the consortium banks will progress discussions in relation to a standby secured liquidity facility," the company said. [2] It moved into the Indonesian nickel industry in 2009. 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. Chinese entrepreneur Xiang Guangda has been caught out by nickel's price surge. In late February and early March, Tsingshan, which had sales of 352 billion yuan (US$56 billion) last year, paid its margin calls on time. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. 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. Several large brokers got margin calls of close to US$1 billion each over the course of the day. Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. Others in the market may also push up prices in anticipation of that short covering. It could be even larger than that when positions taken through intermediaries are taken into account, people separately said. 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. call +44 20 3097 8888 support@capital.com. The LME did not put it into default, instead giving it more time to pay. FY18 RESULTS, FY19 GUIDANCE AND CORPORATE PRESENTATION 22 AUGUST 2018 AGENDA Results Guidance Corporate Operations Growth Exploration Nickel Market DISCLAIMER AND FORWARD https://www.wsj.com/articles/nickel-market-crisis-sends-london-metal-exchange-scrambling-to-prevent-damage-11646858558. Tsingshan and others had to buy . articles a month for anyone to read, even non-subscribers! The Morowali park mainly produces nickel pig iron for stainless steel. The question is, will it continue to fail? Ghali posited to CNN. That means it would have suffered much more than $US2 billion ($2.7 billion) of daily losses at the most extreme point of nickels surge. Copyright | The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. The contribution of a dab has been 44 million to . 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. See here for a complete list of exchanges and delays. A sharp surge in nickel prices triggered margin call fears at the London Metal Exchange which suspended trading after prices doubled in hours. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Given our role in supervising the LME, we have been, and will continue to be, taking a very close interest in how it is managing and responding to the issues, the FCA confirmed in late March. Prices of oil, gas, wheat and a range of metals, including aluminium and palladium, have soared since the invasion, ramping up costs for companies and consumers and threatening the nascent recovery from the coronavirus pandemic. Help using this website - Accessibility statement. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. Capital Com Online Investments Ltd is a limited liability company with company number 209236B. NIC's operations and cash flow remained stable in 2022 despite Tsingshan's significant loss on its nickel short position in March 2022. One of Tsingshans brokers, CCBI Global Markets, also failed to pay hundreds of millions of dollars in margin calls on its nickel positions on March 7. Nevertheless, the short squeeze did trigger a whopping $8 billion margin call on Guangda. At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Li Huan/Red Star News/VCG via Getty Images. This report studies the Ferronickel market, covering market size for segment by type (Ferronickel (Nickel15%), Ferronickel (Nickel15-25%), etc. 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 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. Tsingshan thus desperately scrambled to buy nickel to cover its short position, which only added further upward pressure on prices. Tsingshan agreed standstill with JPMorgan-led group of banks, Talks continue on loan facility to backstop short position. Indeed, Russia is the worlds third-biggest nickel producer after Indonesia and the Philippines. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Xiangs short position has now racked upbillions of dollars in losses. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. Xiang Guangda has been in discussions with banks led by JPMorgan Chase & Co. about a loan facility to backstop his short position, which has roiled the nickel market after he struggled to pay massive margin calls to banks and brokers last week. The fear was that Tsingshan could not make its margin calls, interim payments to parties on the other side of the trade. 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 Xiang's. It decided to cancel all the trades that took place on Tuesday morningUS$3.9 billion of them, according to a Bloomberg calculation. The banks declined comment or did not respond to a request for comment. 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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. Nickel short interest was created by Tsingshan. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. LONDON, March 8 (Reuters) - 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. But nothing could prepare the market for what was about to follow, with the Russia-Ukraine conflict sending prices skywards on global supply concerns. Has been caught out by nickel & # x27 ; s real-time worth. Standstill with JPMorgan-led group of banks, Talks continue on loan facility backstop. Business on Tuesday prices triggered margin call fears at the London Metal Exchange suspended! 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