tsingshan nickel margin call
At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. Others in the market may also push up prices in anticipation of that short covering. . Privacy Policy | It did not provide any other details, such as how long the standstill period would last. 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. Advertise | Careers | Editorial Guidelines | All quotes delayed a minimum of 15 minutes. Challenges Remain, But There Are Opportunities to Be Interview with Mr. Olukayode Pitan, Chief Executive Officer Unemployment in South Africa: Urgent Attention Required, The US-Africa Leaders Summit: Fostering a Closer Relationship with the Continent, Agenda BC#: Innovation and Inclusion in the Brazilian Financial System, Why Fertiliser Prices Have Been So Volatile This Year. 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. A sharp surge in nickel prices triggered margin call fears at the London Metal Exchange which suspended trading after prices doubled in hours. Today, Tsingshan is the biggest nickel producer in the world, accounting for around 20% of the global market. Traders must deposit cash,. Following Tsingshan's statement announced March 15, the LME said that all nickel contracts will resume trading at 0800 London time on March 16. Distribution and use of this material are governed by 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. Q. In recent days, Tsingshan has been under growing pressure from its brokers to meet margin calls on that position - a market dynamic which has helped to drive prices ever higher. Traders must deposit cash, known as margin, with their brokers on a regular basis to cover potential losses on their positions. Xiangs short position has now racked upbillions of dollars in losses. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. "For the period of the standstill, the participating hedge banks agree not to close out positions against Tsingshan or to make further margin calls in respect of existing positions. Another key factor in the recent price volatility was the massive nickel short squeeze built up by Chinas Tsingshan Holding Group, the worlds largest stainless steel producer. Tsingshan, a privately-held company, and other 'shorts' faced larger margin calls on their short bets after the LME raised the amount of money companies had to deposit with it to cover their exposure to falling nickel prices, the three sources said. FY18 RESULTS, FY19 GUIDANCE AND CORPORATE PRESENTATION 22 AUGUST 2018 AGENDA Results Guidance Corporate Operations Growth Exploration Nickel Market DISCLAIMER AND FORWARD 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. Tsingshan was betting that nickel prices would slump but instead they staged an unprecedented rally amid severe economic sanctions against Russia, a major global producer of the metal, over its invasion of Ukraine. (HNI) to produce higher-grade nickel matte. Erin Jonasson. Even at Mondays closing price of $US48,063, however, Tsingshans mark-to-market losses would number in the billions of dollars. Tsingshan thus desperately scrambled to buy nickel to cover its short position, which only added further upward pressure on prices. The LMEs history dates back to the early 19th century, when metal traders drew a circle in the sawdust on the floor of the Jerusalem Coffee House in the City of London. Nickel trading resumed on 16 March 2022. LME brokers and their clients were hit with margin call after margin call. Everything changed when Russia invaded Ukraine. Investors who had booked trades during the chaotic session in the early hours of Tuesdaywere furious. ), by sales channel (Direct Channel, Distribution Channel), by player (Shandong Xinhai Technology, Tsingshan Holding Group, Eramet, Linyi Yichen Alloy, Jiangsu Delong Nickel Industry . Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. The LME nickel short squeeze was created by Chinese stainless-steel producer Tsingshan as it built up massive short positions for the metal, and its margin calls spike in-line with the surge in nickel prices in March. our Subscriber Agreement and by copyright law. Tsingshan's nickel matte plans could be 1st step into lithium battery value chain. The extra charge kicks in at close of business on Tuesday. LME CEO Matthew Chamberlain says suspending nickel trading and canceling the trades on the London Metal Exchange was the right decision for the sake of market stability. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. Moscow's invasion of Ukraine and the west's moves to sanction Russia, a key major supplier, have electrified an already bullish nickel market. People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. 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. That might have taken down some of the LME 's member-brokers. Creditors and banks who acted for Tsingshan were demanding margin settlements and the closing of all positions. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the US$80,000 nickel price. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. 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. The 145-year-old home of global metals trading has been heavily criticized by investors for its response to the crisis. "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. The nickel market was anything but calm. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. Capital Com is an execution-only service provider. (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 . The majority of retail investor accounts lose money when trading CFDs. If the market moves against those positions, they receive a margin call requesting further funds and if they fail to pay, they can be forced to close their position. Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). 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. 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. The Chinese nickel tycoon whose big short position caused chaos reached a deal with his banks to avoid further margin calls, marking a key step toward restoring stability to the market after an unprecedented squeeze. 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 big fear was that Tsingshan would struggle to make margin calls with its bankers, potentially facing billions of dollars in losses. And when those wagers move violently in the opposite direction, they can be hit with huge margin calls, or requests to put down more cash to back their trades. Despite that, reserves that can be economically mined are limited. The metal is found in all our homes as a key ingredient of stainless steel. The first source said that the banks could potentially earn money on a bridge loan secured by future nickel production if Tsingshan paid them back over time as it produced nickel. However, the short position holders have to pay a margin. Nikel Terbang, Pemilik Smelter RI Asal China Rugi Rp 115 T. Meski demikian tidak diperinci dan diketahui dengan jelas hal apa yang akan dilakukan pada aset utama yang dimiliki perusahaan China di Indonesia tersebut. The price spike left Tsingshan exposed to $8 billion USD of trading losses whilst struggling to meet their margin calls. Nickel prices shot up as much as 250% in two days on the LME at the start of this week. Pleased to report an extremely strong year for the Nickel Industries and the. But nothing could prepare the market for what was about to follow, with the Russia-Ukraine conflict sending prices skywards on global supply concerns. Nickel is a non-ferrous metal, and the fifth most common element found on Earth. 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. Is the Strength of Big Tech Regulation Sufficient at Present? Li Huan/Red Star News/VCG via Getty Images. The difference is that nickel is a commodity that touches the entire global economy. The sharp increase in nickel prices was driven by supply concern exacerbated by Russias invsion of Ukraine Russia is the third largest primary nickel producer after Indonesia and China. Three-month nickel on the LME more than doubled to over $100,000 a ton yesterday before the LME stepped in to halt trading of the metal. He draws a comparison with Silver Thursday, the day in 1980 when an attempt bythe Hunt brothersto corner the silver market came unstuck. https://www.wsj.com/articles/chinese-nickel-giant-tsingshan-faces-8-billion-trading-loss-as-ukraine-war-upends-market-11646765353. 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. Tsingshan is an excellent Chinese enterprise, and our positions and operations dont have any problems.. The London Metal Exchange plans to resume trading in nickel, a week after it was suspended when the price of the metal surged to over $100,000 a ton. .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. Credit: INF News.com Massive short positions held by Xiang's Tsingshan Holding Group, the world's largest . To limit price volatility the LME imposed daily upper and lower price limits of 15% for all its physically delivered metals. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. Terms & Conditions Finance Publishing It marked the first major market failure sinceRussias invasion of Ukrainejolted global markets, showing how the removal of one of the worlds largest exporters of resources from the financial system in the space of weeks is having ripple effects across the world. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. The short squeeze gathered momentum as Chinas Tsingshan Holding Group Co. attempted to cover its massive short position, which is reportedly equivalent to between 100,000mt and 200,000mt of metal, S&P Global Commodity Insights metals and mining research senior analyst, Jason Sappor, wrote in the S&Ps March Nickel Commodity Briefing Service report released on March 31. call +44 20 3097 8888 support@capital.com. This copy is for your personal, non-commercial use only. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. Anyone using the LME needs to understand that. Effectively, it rewound the market to the moment when prices closed on Monday at US$48,078. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. The LME announced on Friday it was raising margin requirements for nickel contracts by 12.5% to $2,250 a tonne. 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For most of the past decade, theyd traded between US$10,000 and US$20,000. It got to a point where there were things going on which were not normal market forces. Daniel Ghali, director of commodities strategy at TD Securities, meanwhile, believes the worlds pricing mechanism for nickel is failing. Tsingshan has said it has secured facilities with its consortium banks and will exit its position in an orderly manner. The question is, will it continue to fail? Ghali posited to CNN. The spike was driven in large part by a short squeeze centered on Chinese tycoon Xiang Guangda, who hadamassed a big wagerthat nickel prices would fall through his company Tsingshan Holding Group Co. Xiang Guangda, the actual controller of Tsingshan, believes that the entry of so much nickel into the market will bring nickel prices down. In an earlier interview with Chinese news outlet Yicai, Xiang blamed "foreigners making some moves" for nickel's price spike. read more. Is the US Finally Warming to the Possibility of Creating a CBDC? While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Continue reading your article witha WSJ subscription, Already a member? Xiang didnt believe the rally would last. 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. The price continued to climb higher as one of the world's largest nickel producers, Russia decided to invade Ukraine. The Initial Margin was $20,000 per contract. At $2,250 a tonne, the capital required on 300,000 tonnes of nickel would be $675 million, according to Reuters calculations. 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. Bloomberg News' Joe Deaux reports. [2] It moved into the Indonesian nickel industry in 2009. Neither party seems very keen on this idea, however. 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. If you rely on the information on this page then you do so entirely on your own risk. The metals industry, financial regulators and Chinese officials rushed to resolve a crisis in Londons nickel market, which remained on ice after an ill-fated trade sparked mammoth price gains and billions of dollars of losses. 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. 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. This will allow the trader to buy the security back at a lower price, return it to the lender and hopefully pocket a handsome profit. 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. Xiang Guangda -- who controls the world's largest nickel producer, Tsingshan Holding Group Co., and is known as "Big Shot" in Chinese commodity circles -- has closed out part of his company's short position and is considering whether to exit the wager altogether, the people said. On Monday, one of Tsingshans brokers a unit of a state-owned Chinese bank failed to pay hundreds of millions of dollars in margin calls on its nickel positions. 4.3 Global Ferro Nickel Sales Volume, Revenue, Price and Gross Margin (2016-2022) 4.4 United States Ferro Nickel Sales Volume, Revenue, Price and Gross Margin (2016-2022) By now, the entire nickel industry was in crisis. That would come on top of any losses incurred by the tycoon since he began building the short position late last year through closely held Tsingshan. 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. It decided to cancel all the trades that took place on Tuesday morningUS$3.9 billion of them, according to a Bloomberg calculation. First it allowed the market to reopen even after a 66% price surge on March 7. And it was already heading higher once more in February prior to the outbreak of war in Eastern Europe, partly on renewed interest in the metal as the global economy continued its recovery from the COVID-19 crisis as well as buoyant demand for electric vehicle batteries, of which nickel is a principal component. (Bloomberg) -- 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 the global metals world.Most Read from BloombergHow Biden's Shock-and-Awe Tactic Is Failing to Stop RussiaChina Cease-Fire Proposal for Ukraine Falls Flat With US . While the exact scale of Mr Xiangs losses is unclear, Tsingshans short position on the London Metal Exchange is in the region of 100,000 tonnes of nickel, people familiar with the matter said. The LME has been asleep at the wheel, according to Andrew Mitchell, director of nickel research at consulting firm Wood Mackenzie, who spoke to the Wall Street Journal. 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. Already at an all-time high by 5:42 a.m., it lurched higher in stomach-churning leaps, soaring US$30,000 in a matter of minutes. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Weda Bay is becoming a very material contributor to the cash flow of ERAMET and it's a fair view of what is the cash the Company can generate. The material provided on this website is for information purposes only and should not be understood as an investment advice. 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) in a move that could help calm markets.. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. 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. articles a month for anyone to read, even non-subscribers! read most from bloomberg However, for business days 7th and 8th March, they would remain at . They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. It could be even larger than that when positions taken through intermediaries are taken into account, people separately said. The price move on March 8 created a systemic risk to the market, the LME said two days later. Capital Com Online Investments Ltd is a Company registered in the Commonwealth of The Bahamas and authorised by the Securities Commission of The Bahamas with license number SIA-F245. It granted extra time on March 7th to CCBI Global, a Chinese broker for Tsingshan that is a member of the LME, to raise funds from its state-owned parent, China Construction Bank, to cover. The most notable holder of short positions is Tsingshan Holdings - one of the world's largest nickel and stainless steel producers - which is believed to own positions on about 100,000 tons of nickel with paper losses totaling up to $8 billion before the London Metal Exchange halted trading. The three-month LME nickel prices hit an intra-day high at $101,365 a metric tonne on 8 March 2022. It also doesn't create waste and may help fight the climate crisis. Brokers, in turn, must hold margin at the clearing house, LME Clear. Your decision to trade should depend on your attitude to risk, expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. JPMorgan Chase & Co (JPM.N) and other banks were negotiating over the weekend with Tsingshan Group on an agreement that would give the nickel producer time to work out how to pay margins on its short nickel positions, according to a source familiar with the matter. The major market events for the week ahead right in your inbox. The giant commodity trader Glencore Plc also had a position on the LME that would benefit from rising prices. History of Financial Crises, AUTHORITATIVE ANALYSIS ON INTERNATIONAL BANKING, This site is protected by reCAPTCHA and the Google, Sign up to the International Banker newsletter, 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, 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. Not provide any other details, such as how long the standstill period would last,., hours before the in-person pit trading session was even set to begin nickel prices hit an intra-day high $! Monday at US $ 10,000 and US $ 10,000 and US $ 80,000 nickel price the Chinese billionaire contributed a! 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