tsingshan nickel margin call

.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. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. Cliff Asness, founder of AQR Capital Management,accused the LME, which was for more than a century owned by its members but in 2012 was sold to Hong Kong Exchanges & Clearing, of stealing money from market participants trading in good faith and giving it to Chinese nickel producers and their banks. LMEs Chamberlain defended canceling the trades. Follow the topics, people and companies that matter to you. UNFORGIVEABLE,tweetedMark Thompson, a former trader at Trafigura and Apollo. Mampukan Tsingshan bertahan? China's Tsingshan Holding Group has reached agreements with two companies to swap its . 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. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. The price move on March 8 created a systemic risk to the market, the LME said two days later. Yet the day before, the market had started to unravel, with prices rising by astunning66 per cent to US$48,078. read more. Li Huan/Red Star News/VCG via Getty Images. 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. The big fear was that Tsingshan would struggle to make margin calls with its bankers, potentially facing billions of dollars in losses. Xiang Guangda in 2017. 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. Traders must deposit cash, known as margin, with their brokers on a regular basis to cover potential losses on their positions. See here for a complete list of exchanges and delays. Nickel rocketed to a record high above $US100,000 a tonne on Tuesday, driven in part by Tsingshan and its brokers activity, before trading was suspended. They had offset their deals with Tsingshan by placing their own short positions on the LME. 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. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Box N-4865, Nassau, Bahamas. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. 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. As for the nickel market itself, prices remain elevated compared to before the short squeeze, possibly reflecting the persistence of Western sanctions on Russia. A Glencore spokesman declined to comment. Tsingshans were even larger, numbering roughly US$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. Tsingshan accounted for about half that amount. The creditors involved include both local and intentional banks, including J.P. Morgan and China Construction Bank . For non-personal use or to order multiple copies, please contact The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. On February 22, 2023, Yangjiang News, at the "New Track, Great Future--Qingshan S32001 Duplex Steel Channel Market Launch Conference" hosted by Qingyi Steel For most of the past decade, theyd traded between US$10,000 and US$20,000. Given nickel matte prices of roughly $15,421/t May 18, we calculate a profit margin of $5,571/t for Tsingshan's nickel in matte. Prices had been rising for weeks amid fears of disruptions to supplies from Russia, the largest exporter of refined nickel. Continue reading your article witha WSJ subscription, Already a member? And once again, this short squeeze racked up billions in losses for those involved. Tsingshan was unable meet margin calls and only avoided bankruptcy after . It did not provide any other details, such as how long the standstill period would last. Based on the close on Friday night at $29,130, the LME were raising initial margins to a prudent 7.72% of the contract value. (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 . Xiang Guangda, who controls the worlds largest nickel producer, Tsingshan Holding, and is known as Big Shot in Chinese commodity circles, has closed out part of his companys short position and is considering whether to exit the wager altogether, the people said. Miners, traders, and manufacturers often use the market to make short betsthat is, to make money when prices fall. An employee. 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. 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. Terms & Conditions Finance Publishing Just after 6 a.m., the price of nickel passed US$100,000 a ton. That might have taken down some of the LME 's member-brokers. But nothing could prepare the market for what was about to follow, with the Russia-Ukraine conflict sending prices skywards on global supply concerns. 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. Nickels price moved sharply higher in the week after Russias invasion. Others in the market may also push up prices in anticipation of that short covering. Jack Farchy, Alfred Cang and Mark Burton, Bloomberg News. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. 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. LONDON, March 14 (Reuters) - 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. 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. 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. But to hedge against a a drop in prices, they use. Bloomberg News' Joe Deaux reports. By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. Are you considering whether or not to trade nickel or want to learn more about the market? The metal is found in all our homes as a key ingredient of stainless steel. Executives at Tower Research Capital, one of Wall Streets oldest electronic market-makers, reined in its trading activity on the LME and put its membership in the exchange under review. Indeed, Russia is the worlds third-biggest nickel producer after Indonesia and the Philippines. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. The LME did not put it into default, instead giving it more time to pay. The LME made a near-unprecedented decision. .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! The price continued to climb higher as one of the world's largest nickel producers, Russia decided to invade Ukraine. To gauge the magnitude of the problem, an unnamed source familiar with the trades told the, 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 16, 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, 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, Manuel A. Muoz European Central Bank (ECB), Miguel Moreno Tripp EGADE Business School | Crowe Global, Flix Villatoro Universidad Adolfo Ibez Business School, Kenneth D. Simonson Associated General Contractors of America (AGC), Dalia A. Kader Commercial International Bank (CIB), Davi Ferreira Veronese University of So Paulo, Maria Paula Bertran University of So Paulo, Thanos Andrikopoulos University of Hull, Tim Johnson JB Super Yachts | TJB Private Travel. By now, the entire nickel industry was in crisis. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. Tsingshan, among other Chinese companies, is ramping up a wave of new battery-grade nickel capacity in Indonesia. Many traders expect the price to return to more normal levels once the margin call chaos has been resolved. The Initial Margin was $20,000 per contract. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. Bloombergs Joe Deaux reports. Tsingshan and others had to buy . The difference is that nickel is a commodity that touches the entire global economy. Q. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Nevertheless, the short squeeze did trigger a whopping $8 billion margin call on Guangda. 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. But the effects of the short squeeze are likely to be felt in other ways. Chinese entrepreneur Xiang Guangda has been caught out by nickel's price surge. Nickel prices on the LME jumped to record highs above $100,000 a tonne on March 8 as Tsingshan bought large amounts to reduce its short positions in the metal, which is used to make stainless steel and electric vehicle batteries. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. 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. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. The major market events for the week ahead right in your inbox. LONDON, March 14 (Reuters) - 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 company said on Monday, a move sources said should help calm the market. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. Distribution and use of this material are governed by The price was frozen, below the record high but still at US$80,000 a ton. Things seemed calm at first: Prices were hovering around US$50,000 a ton, and he went to bed. In late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. The LME suspended trading in nickel on Tuesday morning after one of the most dramatic price spikes in commodity market history. Its participants are a mix of the industrial metals companies, which tap the market to offset their price risks, and hedge funds, which use it to speculate. 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 Holding Group held the biggest short position for nickel on the LME. Reuters could not determine how large Tsingshan's short position currently is after it cut its exposure. Only you can decide whether nickel is a good buy or not. ", 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. Tsingshan thus desperately scrambled to buy nickel to cover its short position, which only added further upward pressure on prices. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. 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. The limits also meant that those buyers seeking to unwind their positions had to join a long queue of sellers waiting to complete their transactions. The question is, will it continue to fail? Ghali posited to CNN. Weve received a lot of phone calls today, he said. One thing is sure: If Xiang can weather the storm, Tsingshans nickel producing assets stand to benefit from the higher prices, offsetting losses from the short. Tsingshan made its name producing not the highly purified plates and briquettes which are traded on the LME as Class 1 nickel, but nickel pig iron or NPI lumps of low-grade metal that can. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. 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. You should do your own research, looking at the latest news, technical analysis, and analyst commentary before trading. Just over a year after the historic short squeeze involving video-game retailer GameStop sent shockwaves around the financial world, a similar episode broke out in early March, this time on the London Metal Exchanges (LME) nickel market. By April, nickel prices began to fall below $35,000/tonne and Tsingshan began to close its short positions and settled its margin calls. The majority of retail investor accounts lose money when trading CFDs. It is up nearly 400% so far this year. Comparable-store sales rose 19.3% in fiscal 2020 and grew another 14.4% year over year in the first nine months of 2021. Some think this could herald the end of the exchange itself. Xiang shrugged off suggestions to reduce short positions, Tsingshans nickel short position stood at about 150,000 tons. Exports havent been targeted by sanctions, U.S. and European buyers have nonetheless alternatives. After 6 a.m., the entire nickel industry was in crisis Xiang shrugged off suggestions reduce... Any representations or warranty on the LME they use to intervene a list! As how long the standstill period would last trading and mining giant Glencore was the dominant holder of nickel US. 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