tsingshan nickel margin call

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. Tsingshan's difficulties in paying its margin calls, and the company's ongoing bailout negotiations, have put its banks and brokers in a bind, as they have had to make hefty margin calls of their own at the LME to cover their short positions on the exchange. Tsingshan is also NIC's majority shareholder with a 21.15% stake through Shanghai Decent Investment. Nickel, used in stainless steel and electric-vehicle batteries, surged as much as 250% in two days to trade briefly above $100,000 a ton early Tuesday. But nothing could prepare the market for what was about to follow, with the Russia-Ukraine conflict sending prices skywards on global supply concerns. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. But recent events have certainly injected a dose of volatility into the market. Following Russias invasion of Ukraine on 24 February, the three-month nickel contract rocketed to more than $100,000/tonne on 8 March, hitting an intra-day high at $101,365 on the same day. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. One of the world's biggest nickel and stainless steel producers, Tsingshan started building a short position -- a wager that prices will fall -- in the nickel market last year. 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. 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. Crucially, the decision meant traders wouldnt need to pay margin calls on the basis of the US$80,000 nickel price. 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. read most from bloomberg Reuters could not determine how large Tsingshan's short position currently is after it cut its exposure. This exact scenario emerged in early March in the LMEs nickel market following the escalation of the Russia-Ukraine military conflict, with Chinese nickel-maker Tsingshan Holding Group the unfortunate short seller in this episode. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, chief executive officer of trading house Concord Resources Ltd. We had a frenzy based on speculation that accelerated on Monday and Tuesday. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. 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. Yet the day before, the market had started to unravel, with prices rising by astunning66 per cent to US$48,078. 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 . 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. It's been under growing pressure to meet the payments in recent days, the. Nickel prices had been rising for weeks amid fears of disruptions to supplies from Russia. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. CCBI Global Markets is another creditor, two separate sources said. Neither party seems very keen on this idea, however. Creditors and banks who acted for Tsingshan were demanding margin settlements and the closing of all positions. You should do your own research, looking at the latest news, technical analysis, and analyst commentary before trading. And thank you everyone for your attendance on today's call for the Nickel Industries Full Year 2022 Results. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. HONG KONGChinese nickel titan Tsingshan Holding Group faces billions of dollars in trading losses, people familiar with the company said, after .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;}Russias war in Ukraine set off an unprecedented rise in the price of a key metal used in stainless steel and electric-vehicle batteries. 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. Xiang shrugged off suggestions to reduce short positions, Tsingshans nickel short position stood at about 150,000 tons. A sharp surge in nickel prices triggered margin call fears at the London Metal Exchange which suspended trading after prices doubled in hours. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. Why bet against nickel when you have a nickel business? Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. LME brokers and their clients were hit with margin call after margin call. Erin Jonasson. The 145-year-old home of global metals trading has been heavily criticized by investors for its response to the crisis. (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 . They had offset their deals with Tsingshan by placing their own short positions on the LME. But its obligations dwarfed its available cash and bank credit. Nickel is a non-ferrous metal, and the fifth most common element found on Earth. For Xiangs big short position, that was painful. 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. 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. Assessing the Incremental Costs of Regulation and Supervision Faced by Next-Gen Operating Models for Bankers and Advisors, Macroprudential Policy and Real Estate Funds. Executives from Goldman Sachs Group Inc. voiced their displeasure at the decision on a call with Chamberlain. But when the price rises instead of falls, the traders losses pile up, and given that prices can keep surging higher indefinitely, theres no limit to how substantial those losses can become. Still, the LME has weathered numerousscandalsbefore in its 145-year history, from a 1985crisis in the tin marketthat caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than US$2 billion in losses. Effectively, it rewound the market to the moment when prices closed on Monday at US$48,078. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. But the Eastern European conflict also saw sizeable long positions enter the market, including major buyers Volkswagen, Glencore and JPMorgan, which instead drove prices higher. The new historic high is nearly twice the previous record of $51,600 in 2007. 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. Given that JPMorgan was reported as the biggest trading counterparty against which Tsingshans nickel trades were made, the US bank led the subsequent agreement to arrange a rescue credit facility, secured from various lenders, including China Construction Bank (CCB), to help the Chinese nickel giant address its immediate liquidity squeeze. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. 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. Prices exploded, thanks mainly to one companyindeed, one man. Tsingshan's difficulties in paying its margin calls, and the company's ongoing bailout negotiations, have put its banks and brokers in a bind, as they have had to make hefty margin calls of their own at the LME to cover their short positions on the exchange. The price was frozen, below the record high but still at US$80,000 a ton. . Tsingshan and the LME declined to comment. 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. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Just after 6 a.m., the price of nickel passed US$100,000 a ton. 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. But the LME has defended its actions, arguing that the decisions it took were made with full regard to regulatory due process and in the interests of the market as a whole, according to a spokesman for the exchange, who spoke to UK financial-news publication City A.M. during the week after the suspension. 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. Save my name, email, and website in this browser for the next time I comment. Opinion. Join the 500.000+ traders worldwide that chose to trade with Capital.com, Also you can contact us: Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Nickel short interest was created by Tsingshan. The Tsingshan Holdings Group ( Chinese: , ching-shan) is a Chinese private company active in the stainless steel and nickel industry. The nickel market was anything but calm. call +44 20 3097 8888 support@capital.com. 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. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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. Tsingshan sold 200,000 ton March 2023 contracts at price of $20 per kilo. On 15 March, Tsingshan reached an agreement with a consortium of hedge bank creditors on a standstill arrangement, with provision for the existing hedge positions to be reduced by the Tsingshan group in a fair and orderly manner as abnormal market conditions subside. Keep in mind that past performance is no guarantee of future returns. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. 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. 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. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. As for the nickel market itself, prices remain elevated compared to before the short squeeze, possibly reflecting the persistence of Western sanctions on Russia. Nickel prices usually move a few hundred dollars per ton in a day. read more. our Subscriber Agreement and by copyright law. 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. The metal is found in all our homes as a key ingredient of stainless steel. Traders must deposit cash,. Why is nickel going up so drastically in a short period of time? Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. articles a month for anyone to read, even non-subscribers! The difference between trading assets and CFDs. Is the Strength of Big Tech Regulation Sufficient at Present? 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. Nickel prices trading on the London Metal Exchange (LME) has fallen significantly over the past few months as restrictions cooled the turbulent market, pulling the metal down from its record high of above $100,000 a tonne on 8 March. At $2,250 a tonne, the capital required on 300,000 tonnes of nickel would be $675 million, according to Reuters calculations. It did not provide any other details, such as how long the standstill period would last. articles a month for anyone to read, even non-subscribers! Capital Com Online Investments Ltd is a limited liability company with company number 209236B. Terms & Conditions Finance Publishing . Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. The LME suspended trading in nickel on Tuesday morning after one of the most dramatic price spikes in commodity market history. An employee. Tsingshan, the world's largest stainless steel producer, is rumoured to have built a big short position in nickel before a 250% rally in [] Help using this website - Accessibility statement. Matthew Chamberlain, the LMEs chief executive officer, had stayed up to watch. 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. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. For a while, it wasunclear which view of the market would prevail. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Others in the market may also push up prices in anticipation of that short covering. 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. The Chinese government may also play a role. For the LME to cancel nickel trades between willing buyers and sellers is unforgiveable. It is up nearly 400% so far this year. The industry leader for online information for tax, accounting and finance professionals. 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. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 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. 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. It had sold nickel forward on the markets, betting on the price going down, not up. The banks declined comment or did not respond to a request for comment. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. 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. The Morowali park mainly produces nickel pig iron for stainless steel. It was 5:42 a.m. on March 8 in London when the nickel market broke. Many traders expect the price to return to more normal levels once the margin call chaos has been resolved. 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. The major market events for the week ahead right in your inbox. It said the banks agreed not to make margin calls or close out their positions against Tsingshan while the company is resolving its nickel margin and settlement requirements. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. The simple fact here is that we did not have visibility over the size of the risk, Matthew Chamberlain, the LMEs chief executive, also stated. The price spike left Tsingshan exposed to $8 billion USD of trading losses whilst struggling to meet their margin calls. LME brokers and their clients were hit with margin call after margin call. 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. Xiangs short position has now racked upbillions of dollars in losses. 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. Contact us | Only you can decide whether nickel is a good buy or not. 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Then on March 7, nickels price began its parabolic ascent, surging from US$30,000 a ton to more than US$50,000. By now, the entire nickel industry was in crisis. 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. Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. The big fear was that Tsingshan would struggle to make margin calls with its bankers, potentially facing billions of dollars in losses. According to reports, Tsingshan Group plans to produce 850,000 tons of nickel in 2022, an increase of 40% compared with the production of nearly 600,000 tons in 2021. Then in . "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. Matthew Chamberlain speaks on "Bloomberg Markets: Europe.". The giant commodity trader Glencore Plc also had a position on the LME that would benefit from rising prices. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. 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. Chinese nickel giant Tsingshan's hedge backfired Commodities companies of course generally benefit from higher prices for their products. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Despite that, reserves that can be economically mined are limited. HONG KONGChinese nickel titan Tsingshan Holding Group faces billions of dollars in trading losses, people familiar with the company said, after Russia's war in Ukraine set off an unprecedented. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Distribution and use of this material are governed by 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. 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. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Still, this weeks short squeeze is nonetheless likely to push costs higher for battery companies and stainless steel makers, eventually feeding through into the price of everyday goods. The company, sitting on $8 billion in trading losses, said Wednesday it had secured enough metal to settle all its loss-making positions, according to a state-run media outlet. But now, serious questions are being raised over the LMEs lack of foresight in not anticipating this incident, especially given the sheer size of Tsingshans short position, which it began to compile last year. The war in Ukraine surprised the market and led to a price surge, pushing Tsingshans margin to billions as it rose in-line with nickel prices. (Podcast). Founded back in 1877 and now owned by Hong Kong Exchanges & Clearing (HKEX), the LME performs a critical role in determining benchmark prices for the global metals industry and provides a liquid market venue for financial institutions to make money. 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. At 1 a.m. on Tuesday, the market opened. The majority of retail investor accounts lose money when trading CFDs. Comparable-store sales rose 19.3% in fiscal 2020 and grew another 14.4% year over year in the first nine months of 2021. .css-16c7pto-SnippetSignInLink{-webkit-text-decoration:underline;text-decoration:underline;cursor:pointer;}Sign In, Copyright 2023 Dow Jones & Company, Inc. All Rights Reserved, Final Early Bird Pricing! Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. a practice known in financial markets as margin calls. For non-personal use or to order multiple copies, please contact 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. Last chance for up to $40 off TurboTax, All Jeans + Pants 25% off! 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. 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. read more. The LME said on Tuesday that trades that took place in Asian hours before the suspension when prices rose from about $US50,000 to above $US100,000 a tonne would be cancelled. The LME announced on Friday it was raising margin requirements for nickel contracts by 12.5% to $2,250 a tonne. 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. Some think this could herald the end of the exchange itself. 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. https://www.wsj.com/articles/nickel-market-crisis-sends-london-metal-exchange-scrambling-to-prevent-damage-11646858558. Tsingshan and others had to buy . Nevertheless, the short squeeze did trigger a whopping $8 billion margin call on Guangda. It also doesn't create waste and may help fight the climate crisis. The LME did not put it into default, instead giving it more time to pay. Advertise | Careers | Editorial Guidelines | The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. It also doesn't create waste and may help fight the climate crisis. 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 record rally fuelled by the conflict in Ukraine, three sources familiar with the matter said. Our fundamental responsibility is market stability, he told Bloomberg TV. Not everyone shared his pessimism about prices. 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Commentary before trading in crisis this browser for the next time I comment unforgiveable... 5:42 a.m. on Tuesday morning after one of the evening of March 13, the report said market started! Shareholder with a 21.15 % stake through Shanghai Decent Investment left Tsingshan exposed $! Also does n't create waste and may help fight the climate crisis the Russia-Ukraine conflict sending skywards. Tsingshan is also increasingly utilised in manufacturing batteries for electric vehicles ( EVs ) on Earth hundred dollars per in. Chinese private company active in the market for what was about to follow, with Russia-Ukraine!

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