The big fear was that Tsingshan would struggle to make margin calls with its bankers, potentially facing billions of dollars in losses. A short squeeze is a market condition caused by massive short positions. Why? The LME did not put it into default, instead giving it more time to pay. Xiangs short position has now racked upbillions of dollars in losses. 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. Neither party seems very keen on this idea, however. Indeed, Russia is the worlds third-biggest nickel producer after Indonesia and the Philippines. See here for a complete list of exchanges and delays. 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. In an earlier interview with Chinese news outlet Yicai, Xiang blamed "foreigners making some moves" for nickel's price spike. According to industry members association International Nickel Study Group (INSG), stainless steel production accounts for over two-third of nickel demand in 2020, while the use in batteries for EVs remained low at 6%. https://www.wsj.com/articles/chinese-nickel-giant-tsingshan-faces-8-billion-trading-loss-as-ukraine-war-upends-market-11646765353. First it allowed the market to reopen even after a 66% price surge on March 7. 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. Those past scandals forced reforms on the exchange. China's Tsingshan Holding Group has reached agreements with two companies to swap its . We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. (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 . Comparable-store sales rose 19.3% in fiscal 2020 and grew another 14.4% year over year in the first nine months of 2021. 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. 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. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. The arrangement will also help the pave the way for the London Metal Exchange to restart nickel trading, they said. For most of the past decade, theyd traded between US$10,000 and US$20,000. 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. See here for a complete list of exchanges and delays. 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. Creditors and banks who acted for Tsingshan were demanding margin settlements and the closing of all positions. Most analysts sided with Xiang, at least in the medium term, believing that nickel productionled by Tsingshan and its competitors in Indonesiawould outpace demand. Then, as now, a key factor was the intervention of the exchange. The nickel market was anything but calm. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. Its been under growing pressure to meet the payments in recent days, the people said. LME brokers and their clients were hit with margin call after margin call. The current events are unprecedented, LME said in a notice. A consortium of hedge bank creditors that has a standstill agreement with Tsingshan agreed not to close out the positions against the company or to make further margin calls on the existing positions. 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. Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). Nevertheless, the short squeeze did trigger a whopping $8 billion margin call on Guangda. 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. 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. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. Credit: INF News.com Massive short positions held by Xiang's Tsingshan Holding Group, the world's largest . Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Some have also warned that much of the chaos in the nickel market may not be over yet. The price was frozen, below the record high but still at US$80,000 a ton. Pada titik ini, posisi short Tsingshan dibekukan. It could be even larger than that when positions taken through intermediaries are taken into account, people separately said. The tycoon whose big short bet on nickel helped trigger one of the most dramatic price spikes in history has told his banks and brokers that he doesnt intend to reduce his position, according to people familiar with the matter. 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. Others in the market may also push up prices in anticipation of that short covering. Following Tsingshan's statement announced March 15, the LME said that all nickel contracts will resume trading at 0800 London time on March 16. The difference between trading assets and CFDs. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. 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. Those 18 minutes will haunt me, says the executive, who wasnt authorized to speak publicly. Why? People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . 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. Q. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. And never trade money that you cannot afford to lose. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. 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. Join the 500.000+ traders worldwide that chose to trade with Capital.com, Also you can contact us: At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. articles a month for anyone to read, even non-subscribers! 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. 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. (Podcast). call +44 20 3097 8888 support@capital.com. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. 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. Xiang Guangda in 2017. Tsingshan is also NIC's majority shareholder with a 21.15% stake through Shanghai Decent Investment. Others took to social media. 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. The price moves exacerbated the pressure on holders of big short positions, already facing calls to deposit extra funds with brokers, a practice known in financial markets as margin calls. Is the Strength of Big Tech Regulation Sufficient at Present? It's been under growing pressure to meet the payments in recent days, the. 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. But its obligations dwarfed its available cash and bank credit. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. Distribution and use of this material are governed by 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. (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 . 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