tsingshan nickel margin calltsingshan nickel margin call

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. Why? The head of one London metals brokerage recalls feeling sick as he watched the moves, realizing what the spike in prices would mean for his company, the market, and the global metals industry. 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 . It is up nearly 400% so far this year. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. Several large brokers got margin calls of close to US$1 billion each over the course of the day. Many traders expect the price to return to more normal levels once the margin call chaos has been resolved. 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. Sanctions being implemented by Western powers against Russia over the invasion of its neighbour raised immediate concerns over the global supply of nickel, a metal that is primarily used around the world to make stainless steel and batteries and of which Russia accounts for around 10 percent of global supply. 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. However, for business days 7th and 8th March, they would remain at . Tsingshan Holdings has secured loan packages from various lenders, according to a Bloomberg report citing unnamed sources, following a record short squeeze that saw nickel prices more than double in hours earlier this week. For participants in commodities exchanges, a price rally is not necessarily good news. If you are considering investing or trading nickel, its important to do your own research. Are you considering whether or not to trade nickel or want to learn more about the market? 3.1 What is the margin call to Tsingshan? But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. The major market events for the week ahead right in your inbox. [2] It moved into the Indonesian nickel industry in 2009. 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. At $2,250 a tonne, the capital required on 300,000 tonnes of nickel would be $675 million, according to Reuters calculations. While the exact scale of Mr Xiangs losses is unclear, Tsingshans short position on the London Metal Exchange is in the region of 100,000 tonnes of nickel, people familiar with the matter said. 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. Among them were some of the biggest names on Wall Street. The broker was able to settle the margin calls on Tuesday after several clients, including Tsingshan, got loans to cover their positions, one of the people said. 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. On February 22, 2023, Yangjiang News, at the "New Track, Great Future--Qingshan S32001 Duplex Steel Channel Market Launch Conference" hosted by Qingyi Steel At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. It did not provide any other details, such as how long the standstill period would last. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. The annals of commodity markets are full of tales of producers and traders, fromMetallgesellschaftto Sumitomo, that blurred the lines between hedging and speculation and ended with billions of dollars in losses. 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 Wall Street Journal. 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. Box N-4865, Nassau, Bahamas. 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. People forgot that this isnt a video game retailer; its an important physical commodity.. Those past scandals forced reforms on the exchange. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Tsingshan's 2022 nickel equivalent output is . Assessing the Incremental Costs of Regulation and Supervision Faced by Next-Gen Operating Models for Bankers and Advisors, Macroprudential Policy and Real Estate Funds. China's Tsingshan Holding Group has reached agreements with two companies to swap its . There are also traders making plans to abandon the LME nickel contract, a move that would reduce market liquidity, making it harder for everyone from miners to car companies to manage their exposure to prices and access financing. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. But since last year, Tsingshan has also started to produce a source of nickel for batteries. The London nickel market has been closed since last Tuesday morning, when the exchange intervened after prices spiked as much as 250% in two days, and the standstill announced by Xiangs Tsingshan Group Holding Co. could provide the certainty needed to restart trading. Its not clear to what extent Xiang saw his position as merely a hedge or as a speculative bet. Indeed, reports suggest that a number of investors are now preparing lawsuits, while the LMEs regulator, the Financial Conduct Authority (FCA), is expected to investigate the incident. It could be even larger than that when positions taken through intermediaries are taken into account, people separately said. Trimegah menilai bisa. Then, as now, a key factor was the intervention of the exchange. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. This is a fee deposit with a counterparty (often the brokers or exchange) to cover some of the credit risk undertaken to take a short position. Today, Tsingshan is the biggest nickel producer in the world, accounting for around 20% of the global market. Tsingshan's were even larger, numbering roughly US$3 billion, according to a Bloomberg calculation based on the company's total short positionwhich, even after Xiang . On this day, however, metal traders across the city were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. LME brokers and their clients were hit with margin call after margin call. Late Tuesday, the exchange said it anticipates trading wont resume before Friday. This report studies the Ferronickel market, covering market size for segment by type (Ferronickel (Nickel15%), Ferronickel (Nickel15-25%), etc. 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. 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. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . 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. 2023 Capital Com Online Investments Ltd. See here for a complete list of exchanges and delays. 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. In a squeeze, rising prices put traders betting on a drop in an ever-tougher financial position, forcing them or brokers and banks doing business on their behalf to buy the asset, a trade known as short covering that can drive prices even higher. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. Last chance for up to $40 off TurboTax, All Jeans + Pants 25% off! 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. On March 8,2022 price of Nickel went suddenly up $100 per kilogram . 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. 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 . The difference between trading assets and CFDs. 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. 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. Nickel prices have since fallen and the three-month nickel last settled at $23,371/tonne on 3 November. They had offset their deals with Tsingshan by placing their own short positions on the LME. The company paid at least some of its margin calls early on Monday, according to a person familiar with the matter. 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.. ", 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. You should do your own research, looking at the latest news, technical analysis, and analyst commentary before trading. "In the course of the standstill period, Tsingshan and the consortium banks will progress discussions in relation to a standby secured liquidity facility," the company said. Why is nickel going up so drastically in a short period of time? 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 nickel market was anything but calm. You should never trade more than you can afford to lose. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. And never trade money that you cannot afford to lose. 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. 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. Then in . 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 . After trading was suspended Tuesday following an unprecedented surge in prices, the London Metal Exchange said it does not expect nickel trading to resume before March 11. That might have taken down some of the LME 's member-brokers. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Others in the market may also push up prices in anticipation of that short covering. Distribution and use of this material are governed by But nothing could prepare the market for what was about to follow, with the Russia-Ukraine conflict sending prices skywards on global supply concerns. By April, nickel prices began to fall below $35,000/tonne and Tsingshan began to close its short positions and settled its margin calls. If the market moves against those positions, they receive a margin call requesting further funds and if they fail to pay, they can be forced to close their position. Only you can decide whether nickel is a good buy or not. It was 5:42 a.m. on March 8 in London when the nickel market broke. Credit: INF News.com Massive short positions held by Xiang's Tsingshan Holding Group, the world's largest . 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. The creditors involved include both local and intentional banks, including J.P. Morgan and China Construction Bank . Exchanges. The current events are unprecedented, LME said in a notice. our Subscriber Agreement and by copyright law. 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 . read more. 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. Its been under growing pressure to meet the payments in recent days, the people said. 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. 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. The LMEs special committee held another call at about 6 a.m. Now they recognized that they had tosuspend trading. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. For non-personal use or to order multiple copies, please contact Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. 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. 4.3 Global Ferro Nickel Sales Volume, Revenue, Price and Gross Margin (2016-2022) 4.4 United States Ferro Nickel Sales Volume, Revenue, Price and Gross Margin (2016-2022) Tsingshan and the LME declined to comment. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. Indeed, Russia is the worlds third-biggest nickel producer after Indonesia and the Philippines. 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 above the $20,000/metric tonne (mt) mark on the upside before 2022. The question is, will it continue to fail? Ghali posited to CNN. It also doesn't create waste and may help fight the climate crisis. Copyright | Known as "Big Shot" in China for his imposing presence in the metal industry, Xiang Guangda, the founder of the world's 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 Tsingshan is also a nickel miner and operates nickel pig iron mines and production facilities. Nickel short interest was created by Tsingshan. The LME nickel short squeeze was created by Chinese stainless-steel producer Tsingshan as it built up massive short positions for the metal, and its margin calls spike in-line with the surge in nickel prices in March. 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. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. 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. 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. It also doesn't create waste and may help fight the climate 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 . Is the US Finally Warming to the Possibility of Creating a CBDC? This is lower than Nickel Mines' expected profit margin for nickel in matte at current prices. (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 . In recent days, Tsingshan has been under growing pressure from its brokers to meet margin calls on that position - a market dynamic which has helped to drive prices ever higher. 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. Tsingshan and others had to buy . Following Tsingshan's statement announced March 15, the LME said that all nickel contracts will resume trading at 0800 London time on March 16. Brokers, in turn, must hold margin at the clearing house, LME Clear. The price move on March 8 created a systemic risk to the market, the LME said two days later. The fear was that Tsingshan could not make its margin calls, interim payments to parties on the other side of the trade. 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. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. The Companys registered office is at Bahamas Financial Centre, 3rd Floor, Shirley and Charlotte Street, P.O. The price was frozen, below the record high but still at US$80,000 a ton. Tsingshan, the world's largest stainless steel producer, is rumoured to have built a big short position in nickel before a 250% rally in [] Nickel short interest was created by Tsingshan. The fallout was immediate. 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. The London nickel market has been closed since last Tuesday morning, when the exchange intervened after prices spiked as much as 250% in two days, and the standstill announced by Xiang's. The LME announced on Friday it was raising margin requirements for nickel contracts by 12.5% to $2,250 a tonne. Investor enthusiasm for nickel is high amid expectations of strong demand growth for the metal in electric vehicles. It should be mentioned that nickel had already rallied to $25,000 in January before easing off by the end of the month. Mr Xiang told Chinese news outlet Yicai that Tsingshan did not have any problems with its nickel trading. (Podcast). All quotes delayed a minimum of 15 minutes. This copy is for your personal, non-commercial use only. Now they had to pay big margin calls on the exchange while receiving no margin from their client. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. Yet the day before, the market had started to unravel, with prices rising by astunning66 per cent to US$48,078. 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. Moscow's invasion of Ukraine and the west's moves to sanction Russia, a key major supplier, have electrified an already bullish nickel market. 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. 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%. 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. Then on March 7, nickels price began its parabolic ascent, surging from US$30,000 a ton to more than US$50,000. Bloombergs Joe Deaux reports. Bloomberg: Balance of Power focuses on the politics and policies being shaped by the agenda of President Biden's administration. Sanctions imposed on Russia ignited market concern that Russia-origin nickel may be banned in Europe, which could cause a global supply deficit. Our Standards: The Thomson Reuters Trust Principles. The metal is found in all our homes as a key ingredient of stainless steel. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. 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 late February and early March, Tsingshan, which had sales of 352 billion yuan ($56 billion) last year, paid its margin calls on time. 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. 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. call +44 20 3097 8888 support@capital.com. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Tsingshan is an excellent Chinese enterprise, and our positions and operations dont have any problems.. At 1 a.m. on Tuesday, the market opened. Tsingshan sold 200,000 ton March 2023 contracts at price of $20 per kilo. Read on for our analysis on the recent LME nickel short squeeze and the market outlook. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. 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. Why bet against nickel when you have a nickel business? 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. A short squeeze is a market condition caused by massive short positions. 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. For non-personal use or to order multiple copies, please contact 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. The extra charge kicks in at close of business on Tuesday. read more. The industry leader for online information for tax, accounting and finance professionals. 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. Tsingshan yang dimiliki oleh swasta secara harfiah memiliki arti "gunung hijau", berbasis di kota Wenzhou di China dan memiliki . Privacy Policy | The frenzied move the largest-ever on the LME came as investors and industrial users who had sold the metal scrambled to buy the contracts back after prices initially rallied on concerns . (Podcast). 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. Contact us | Matthew Chamberlain speaks on "Bloomberg Markets: Europe.". The majority of retail investor accounts lose money when trading CFDs. Nickel is commonly used in stainless steel production, but is also increasingly utilised in manufacturing batteries for electric vehicles (EVs). Tsingshan Holdings was founded in 1988 by Xiang Guangda in Wenzhou. 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. When you have a nickel business physical commodity.. Those past scandals forced reforms the... 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Exchanges and delays biggest names on Wall Street exchange is likely to introduce such measures position... Payments to parties on the recent LME nickel short squeeze of Tsingshan, the capital required on 300,000 tonnes nickel...

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