For the LME, the future isunclear. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Chinese metal giant Tsingshan Holding Group Ltd., caught in a massive short squeeze amid an unprecedented rally in the price of nickel, reached a deal with banks to avoid further margin calls.. Tsingshan, one of the world's biggest nickel and stainless steel producers, worked out a standstill arrangement with a consortium of hedge bank creditors that will allow the company to continue . China's Tsingshan Holding Group has reached agreements with two companies to swap its . Xiang shrugged off suggestions to reduce short positions, Tsingshans nickel short position stood at about 150,000 tons. Tsingshan and others had to buy . Some aggrieved traders are already preparing to take legal action against the exchange. And once again, this short squeeze racked up billions in losses for those involved. The super spike was driven by holders of short positions, including Tsingshan and its brokers, rushing to close them out. read more. Perdagangan nikel di LME dihentikan sementara sejak Selasa lalu. The London Metal Exchange initially announced rule changes late Monday in respond to a daily spike of as much of 90% (Reuters) Nickel, used in stainless steel and electric-vehicle batteries . 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. President Tayyip Erdogan indicated on Wednesday that elections will be held on May 14, sticking to his previous plan for the vote with a date just over three months after a devastating earthquake killed more than 45,000 people in Turkey. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. . When it was flying towards US$100,000, you could feel the damage, and you knew companies were fighting for their existence, says John Browning, founding partner of brokerage Bands Financial Ltd. and a former LME board member. For Xiangs big short position, that was painful. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. Keep in mind that past performance is no guarantee of future returns. See here for a complete list of exchanges and delays. Anyone using the LME needs to understand that. 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. You should do your own research, looking at the latest news, technical analysis, and analyst commentary before trading. https://www.wsj.com/articles/nickel-market-crisis-sends-london-metal-exchange-scrambling-to-prevent-damage-11646858558. Traders must deposit cash, known as margin, with their brokers on a regular basis to cover potential losses on their positions. He started increasing his short position on the London Metal Exchange. For the fourth quarter, the company expects to generate "high single-digit. It was 5:42 a.m. on March 8 in London when the nickel market broke. But since last year, Tsingshan has also started to produce a source of nickel for batteries. 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. 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. 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. Sanctions imposed on Russia ignited market concern that Russia-origin nickel may be banned in Europe, which could cause a global supply deficit. read more. 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. Distribution and use of this material are governed by Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. A Glencore spokesman declined to comment. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. 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. 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. LONDON (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 . Several large brokers got margin calls of close to US$1 billion each over the course of the day. At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. If you are considering investing or trading nickel, its important to do your own research. About 50,000 tonnes of Xiang's total nickel short position of over 150,000 tonnes is held through an over-the-counter position with JP Morgan, which means Tsingshan owed the bank about US$1 . Known as Big Shot in China for his imposing presence in the metal industry, Xiang Guangda, the founder of the worlds biggest nickel and stainless-steel firm, Tsingshan, had amassed a short position of more than 150,000 tonnes of nickel, which was about five times the volume of the metal held by the LME and equivalent to approximately one-eighth of all of the LMEs outstanding contracts at its peak. A record-breaking rally in nickel prices that led the London Metal Exchange to halt trading on Tuesday is putting increased pressure on the Chinese stainless steel producer Tsingshan and its billionaire co-founder. Copyright | 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. 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. Xiangs short position has now racked upbillions of dollars in losses. Is the US Finally Warming to the Possibility of Creating a CBDC? 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. (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 . For non-personal use or to order multiple copies, please contact 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. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Jack Farchy, Alfred Cang and Mark Burton, Bloomberg News. Exchanges. The tightness in the market had been exacerbated by the presence of an unidentified trader who, according to exchange data, controlled somewhere between 50 per cent and 80 per cent of nickel warehouse warrants monitored by the LME as of last month. 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. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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. Many traders expect the price to return to more normal levels once the margin call chaos has been resolved. Financial markets are on edge after the London Metal Exchange last week granted a reprieve to the giant Chinese nickel producer, which . 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. For non-personal use or to order multiple copies, please contact Tsingshan has said it has secured facilities with its consortium banks and will exit its position in an orderly manner. Chinese nickel giant at center of action, Tsingshan, received financial lifeline from banks to help meet margin calls related to $8 billion in paper losses Since Russia invaded Ukraine at the. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. The LME suspended trading in nickel on Tuesday morning after one of the most dramatic price spikes in commodity market history. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. 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. An employee. Yet the day before, the market had started to unravel, with prices rising by astunning66 per cent to US$48,078. Then in . Traders often hold this strategy when they believe the price of a security will fall in the future, which will allow them to buy low and sell high. 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. Tsingshan thus desperately scrambled to buy nickel to cover its short position, which only added further upward pressure on prices. Help using this website - Accessibility statement. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. In response to the crisis, the LME suspended nickel trading on 8 March and cancelled all trades executed on or after 00:00 UK time on 8 March 2022 in the inter-office market and on LMEselect (LME online trading platform) until further notice.. 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