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. It was 5:42 a.m. on March 8 in London when the nickel market broke. . Nickel prices, however, has been moving in an uptrend for a long time. For Xiangs big short position, that was painful. The difference is that nickel is a commodity that touches the entire global economy. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trim their bets. 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. 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 . 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. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Canada Nickel Company Inc. $1.24. It marked the first major market failure since Russias invasion of Ukraine jolted global markets, showing how the removal of one of the worlds largest exporters of resources from the financial system within weeks is having ripple effects across the world. Nickel prices doubled on Tuesday and briefly rose above a record $100,000 a tonne as banks and brokers rushed to close part of a huge position amassed by Xiang Guangda, the billionaire founder of . Project manager for transition of Sudbury INO from CAMP to Deswik. Nickel. 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. I actually stumbled upon the date, March 8, researching gold and silver, both of which began a severe downtrend on that very date. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. 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 . Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Even at that level, clients of LME brokers had failed to pay some $500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. 389 8 Comments. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. (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.). Those past scandals forced reforms on the exchange. While investors who sell stocks short want the price to drop, in commodity markets many producers, traders, and users take short positions as a hedge against losses on the physical commodities they hold in inventories. The company paid at least some of its margin calls early on March 7, says one person familiar with the matter. During the fiscal year 2021, the Swiss-based company Glencore reported a nickel production of some 102.3 thousand metric tons. 20 kt/a nickel in concentrate) and Fraser Morgan (ca. 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. 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. Golf's Greatest Holes: Golfing legend Paul McGinley takes television presenter Chris Hollins on a tour of the best golf courses in Ireland and Northern Ireland. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. 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 dollar hit a one-week low earlier Wednesday after China's yuan gained. The price move on March 8 created a systemic risk to the market, the LME said two days later. Major international companies like BHP Group Ltd. and Rio Tinto Plc hedge against currencies, commodity prices and interest rates on an as required basis. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. ESC Mali school of busness. The Chinese government may also play a role. Now they recognised that they had to suspend trading. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. Tsingshan is an excellent Chinese enterprise.. Tsingshan Group is the partner of Huayou that develops the nickel project. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. Stephen Engle reports. Enter the code below to reset your password. 5 000 MT. Others in the market may also push up prices anticipating that short covering. While few observers believed Xiang could reach that level of production, he was confident. The latest price was A$0.04 (25-minute delay). The company had plans to produce 850,000 tons of nickel in 2022, an increase of 40% in a year, according to a person briefed on them. 6W - 9M. 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. The Murrin Murrin Mine is a major nickel-cobalt mining operation being conducted in the North Eastern Goldfields, approximately 45 km east of Leonora, Western Australia.The project was initiated as a joint venture between Murrin Murrin Holdings Pty Ltd, a wholly owned subsidiary of Anaconda Nickel Limited (whose share was 60%) and Glenmurrin Pty Ltd, a wholly owned subsidiary of Glencore . Then came a geopolitical crisis that caught him unawares. Just after 6am, the price of nickel passed $US100,000 a tonne. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Discovery of the deposits is credited to Murray Edmund Watts in 1931 or 1932. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. . Coal Department. But the obvious consequence of so much nickel hitting the market, he believed, would be a fall in its price. Why bet against nickel when you have a nickel business? 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. Already at an all-time high by 5.42am, it lurched higher in leaps, soaring $US30,000 in a matter of minutes. For Xiangs big short position, that was painful. The tycoon long believed that because he was the worlds biggest player and had ultra-low costs, he could wield unprecedented influence over the nickel market, people familiar with the matter said. China's manufacturing activity expanded at the fastest pace in more than a decade in February. 115 000 MT. MT. Raglan Mine is a nickel-copper operation located in the Arctic region at the extreme limit of northern Quebec. articles a month for anyone to read, even non-subscribers! Were sorry, this feature is currently unavailable. 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. Baar, Zug, Switzerland. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel mattefor electric vehicle batteries. In theory, there should be two options for this 200,000 tons of nickel short order: 1. (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. Toronto, Ontario-- (Newsfile Corp. - March 1, 2023) - Mink Ventures Corporation. Everything changed when Russia invaded Ukraine on February 24. Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. 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. Why bet against nickel when you have a nickel business? In cobalt, a Chinese state-owned firm is also quite large, but Glencore is still the largest producer of cobalt in the free world. Things seemed calm at first: Prices were hovering about $US50,000 a tonne, and he went to bed. 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. 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. spiked by as much as 250 per cent in little more than 24 hours. When Norilsk Nickel left the Western markets, Glencore became its main substitute for nonferrous metals. Nickels price moved sharply higher in the week after Russias invasion. Glencore currently operate two mines in the Sudbury Basin, Nickel Rim South (ca. Xiang Guangda, the billionaire owner of Tsingshan Holding Group. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank, will take. Nicknamed Big Shot in Chinese commodity circles, people who know him say he has absolute confidence in his convictions and doesnt hesitate to bet big on his visions for the future. Back Submit. The LME at the end of the day is a physical metal market, he says. Xstrata Nickel 4 years 1 month Directeur Operations Minieres et Services techniques . Glencore's original trading business is still a powerhouse and is . Glencore's disclosure follows a forecast earlier this month that there needs to be greater investment in nickel production, even though the short-term picture suggests there will be a glut of the metal. For participants in commodities exchanges, a price rally is not necessarily good news. Then on March 7, nickels price began its parabolic ascent, surging from $30,000 a ton to more than $50,000. 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