A sharp surge in nickel prices triggered margin call fears at the London Metal Exchange which suspended trading after prices doubled in hours. Capital Com is an execution-only service provider. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. The Morowali park mainly produces nickel pig iron for stainless steel. Assessing the Incremental Costs of Regulation and Supervision Faced by Next-Gen Operating Models for Bankers and Advisors, Macroprudential Policy and Real Estate Funds. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel matte. read more. In an earlier interview with Chinese news outlet Yicai, Xiang blamed "foreigners making some moves" for nickel's price spike. China's Tsingshan Holding Group has reached agreements with two companies to swap its . Bloomberg News' Joe Deaux reports. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. 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. Traders must deposit cash, known as margin, with their brokers on a regular basis to cover potential losses on their positions. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Tsingshan, among other Chinese companies, is ramping up a wave of new battery-grade nickel capacity in Indonesia. If you rely on the information on this page then you do so entirely on your own risk. Credit: INF News.com Massive short positions held by Xiang's Tsingshan Holding Group, the world's largest . The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Several large brokers got margin calls of close to US$1 billion each over the course of the day. Executives from Goldman Sachs Group Inc. voiced their displeasure at the decision on a call with Chamberlain. As such, if Tsingshan can weather the losses on its LME positions, the higher prices could yet benefit its core business of producing nickel and stainless steel. 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.. If you are considering investing or trading nickel, its important to do your own research. 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. Financial markets are on edge after the London Metal Exchange last week granted a reprieve to the giant Chinese nickel producer, which . ), by application (Stainless Steel Industry, Electronics Industry, etc. On February 22, 2023, Yangjiang News, at the "New Track, Great Future--Qingshan S32001 Duplex Steel Channel Market Launch Conference" hosted by Qingyi Steel The new historic high is nearly twice the previous record of $51,600 in 2007. Capital Com Online Investments Ltd is a limited liability company with company number 209236B. Tsingshan has secured credit promises from banks including JPMorgan Chase & Co. and China Construction Bank that could allow it to avoid defaulting on its margin calls, Bloomberg reported. Then on March 7, nickels price began its parabolic ascent, surging from US$30,000 a ton to more than US$50,000. 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. Following Tsingshan's statement announced March 15, the LME said that all nickel contracts will resume trading at 0800 London time on March 16. They had offset their deals with Tsingshan by placing their own short positions on the LME. (HNI) to produce higher-grade nickel matte. The LME was forced to suspend nickel trading for the first time since 1988 on March 8 and is trying to facilitate negotiations to net off long and short positions in order to reopen the market. It's been under growing pressure to meet the payments in recent days, the. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 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. our Subscriber Agreement and by copyright law. 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 fourth quarter, the company expects to generate "high single-digit. The LME at the end of the day is a physical metal market, he says. Tsingshan Holding Group held the biggest short position for nickel on the LME. "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. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Now they had to pay big margin calls on the exchange while receiving no margin from their client. The extra charge kicks in at close of business on Tuesday. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. read more. The three-month LME nickel prices hit an intra-day high at $101,365 a metric tonne on 8 March 2022. 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. Xiang Guangda in 2017. Li Huan/Red Star News/VCG via Getty Images. Advertise | Careers | Editorial Guidelines | The LME nickel short squeeze. But nothing could prepare the market for what was about to follow, with the Russia-Ukraine conflict sending prices skywards on global supply concerns. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. (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 . Tsingshan sold 200,000 ton March 2023 contracts at price of $20 per kilo. This report studies the Ferronickel market, covering market size for segment by type (Ferronickel (Nickel15%), Ferronickel (Nickel15-25%), etc. Then, as now, a key factor was the intervention of the exchange. 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. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. The majority of retail investor accounts lose money when trading CFDs. Our Standards: The Thomson Reuters Trust Principles. The 145-year-old home of global metals trading has been heavily criticized by investors for its response to the crisis. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . Three-month nickel on the LME more than doubled to over $100,000 a ton yesterday before the LME stepped in to halt trading of the metal. Is the Strength of Big Tech Regulation Sufficient at Present? Margin call ini membuat harga nikel meledak dan menembus US$ 100 ribu per ton dari hanya US$ 25 ribu per ton. The industry leader for online information for tax, accounting and finance professionals. The difference between trading assets and CFDs. Nickel trading did resume on March 16, but the exchanges electronic trading system malfunctioned on several occasions after resumption, while preset daily limits on price movements (5 percent on the 16th, then 8 percent the following day, 12 percent on March 18 and 15 percent from March 21) prevented futures prices from falling sufficiently to levels that would entice buyers to enter the market once more. ", Britain's Financial Conduct Authority (FCA) and the Bank of England are talking to the London Metal Exchange about the resumption of a fair and orderly market in nickel, the FCA said on Monday in response to a request for comment. 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. For non-personal use or to order multiple copies, please contact The question is, will it continue to fail? Ghali posited to CNN. Tsingshan yang dimiliki oleh swasta secara harfiah memiliki arti "gunung hijau", berbasis di kota Wenzhou di China dan memiliki . 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. losed Joint Stock Company FinTech Solutions. Not surprisingly, investors have not been particularly satisfied with the LMEs actionsor lack thereofin allowing this situation to transpire. On the London Metal Exchange, the premier trading and price-formation venue for industrial metals, nickel traded between $10,000 and $20,000 per metric ton and moved about $100 each day. Their way to the giant Chinese nickel producer, which Morowali park mainly nickel... 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