glencore nickel short
Glencore Nickel. For participants in commodities exchanges, a price rally is not necessarily good news. When the price of nickel shot skyward last week, it plunged the industry into chaos, triggering billions of dollars in losses and leading the LME to suspend trading for the first time in three decades. Beijing is supportive of him, Xiang told contacts recently. Trading and mining giant Glencore Plc was the dominant holder of nickel in recent months, according to people familiar with the matter. . The LME at the end of the day is a physical metal market, he says. Glencore plc is a Swiss multinational commodity trading and mining company with headquarters in Baar, Switzerland. (This account of events in the nickel market is based on dozens of interviews with people involved, many of whom requested anonymity because the matters are private.). Soon Chamberlain and other executives at the exchange began receiving frantic phone calls from LME brokers. Glencore has a short interest ratio ("days to cover") of 0.2, which is generally considered an acceptable ratio of short interest to trading volume. Its also one of the most important raw materials needed in making batteries for electric vehicles. 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 . 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. Xiang has told his banks and brokers that he still thinks the nickel price will fall and wants to keep his short position, Bloomberg reported on Thursday, citing people familiar with the matter. Late Tuesday . Source: LME. Xiang didnt believe the rally would last. Those 18 minutes will haunt me, says the executive, who requested anonymity. 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. Tsingshan Group is the partner of Huayou that develops the nickel project. 2W - 6W. 92 132 MT. 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 Xiang got to this point is a story that encompasses Chinas emergence as a global economic behemoth. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. I see all automakers within a short time creating their own 4680 . That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered, in a bind. Chinese entrepreneur Xiang Guangda has been caught out by nickels price surge. . The show will focus on global macro issues with a middle eastern context, provide expert analysis of major market moving stories and speak with the biggest newsmakers in the region. WATCH: The Chinese tycoon, known as Big Shot in commodities circles is said to be facing billions of losses. Nickel. While Russias nickel exports havent been targeted by sanctions, U.S. and European buyers have nonetheless sought alternatives to Russian sources. Our nickel operations are in Canada, Australia, Norway, and New . Strong passwords include numbers,letters,and special characters. If you don't see the email, check your junk, spam or other folders. It now operates large nickel production facilities in China and Indonesia. He went on to pioneer new methods for producing nickel and stainless steel that upended the markets and made his Tsingshan the worlds largest producer of both. Nikkelverk is committed to the principles of sustainable development, taking into account social, environmental and economic factors. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Company says it puts it into the league of the largest undeveloped nickel deposits in the world. Glencore is still a short opportunity but mid-2022 looks to be the end of long run commodity bear trend. By now, Tsingshan wasnt the only nickel company that was struggling, just the biggest. At 1am on March 8, the market opened. Production 2019. Tsingshans nickel doesnt match the grade used in settlement on the LME, so the contracts arent a perfect hedge. We're taking you for a deep dive into the world of copper - a versatile metal and important component for a low-carbon future. But the effects of the short squeeze are likely to be felt in other ways. 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. Your email address will not be published. Xiangs short position has now racked upbillions of dollars in losses. Its still unclear how much of a risk the nickel rally and a cash drain from topping up margin payments pose to the company. It was a classic short squeeze, as the pain for Tsingshan, its brokers, and other shorts created a self-reinforcing cycle. The company had a further 120,000 tons or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase & Co. and Standard Chartered Plc. Xiang himself had little interest in international news, the people said, and the growing speculation over a possible war was hard to track in China. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. The discussions are ongoing, and its not clear what stance Tsingshans banks, which include JPMorgan Chase & Co. and China Construction Bank Corp., will take. Company says it puts it into the league of the largest undeveloped nickel deposits in the world. Just after 6 a.m., the price of nickel passed $100,000 a ton. The LMEs special committee held another call at about 6am. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Murrin Murrin is a nickel-cobalt operation in the north-eastern Goldfields of Western Australia, producing refined nickel and cobalt metal. As Russias invasion of Ukraine pushed up prices, short-position holders including Tsingshan scrambled to trim their bets. Our positions and operations dont have any problems, Xiang Guangda, who is also the Wenshou-based companys founder, told Yicai Global yesterday. On this day, however, metal traders were glued to a screen, watching the price action on the electronic market, which was already open to accommodate Asian trading. 6W - 9M. It decided to cancel all the trades that took place on Tuesday morning$3.9 billion of them, according to a Bloomberg calculation. However, Xiang believed the risks to be manageable, the people said, even as anunidentified nickel stockpilercontrolled at least half of the inventories on the exchange. Still, the LME has weathered numerous scandals before in its 145-year history, from a 1985 crisis in the tin market that caused many brokers to go out of business to the incident when a trader at Sumitomo hid more than $US2 billion in losses. Your email address will not be published. However, Xiang believed the risks to be manageable, the people said, even as an unidentified nickel stockpiler controlled at least half of the inventories on the exchange. Glencore. Why? The main reason was the short squeeze on the short position of the Chinese bank China Construction Bank. The total volume mined by Glencore in 2021 fell compared to 2020, in part due to supply chain problems and the closure of some mines. Credit: INF News.com. Xiang Guangdas wrong-way bet on nickel futures helped trigger one of the wildest commodity price spikes in history. People forgot that this isnt a video game retailer; its an important physical commodity.. Xiang Guangda -- who controls the worlds largest nickel producer, Tsingshan Holding Group Co., 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. Effectively, it rewound the market to the moment when prices closed on Monday at $48,078. Shanghais most-traded nickel futures contract soared to CNY228,810 (USD36,235) a tonthe same day, and trading is suspended today. The LME made a near-unprecedented decision. Copper. Ore is processed at the Strathcona mill. That could either result in a huge loss for Tsingshan or the sale of a more than 60 percent stake in the companys Indonesian nickel mine and interest in its industrial park in the southeast Asian country, the report said. Hansen of Concord Resources argues that financial investors who traded nickel last week should have been prepared for the LME to step in. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. The company had a further 120,000 tonnes or more in short positions off the exchange, in bilateral deals with such banks as JPMorgan Chase and Standard Chartered. The price was frozen, below the record high but still at $80,000 a ton. Xiang was aware of flaws in his strategy, people familiar with the matter said. He draws a comparison with Silver Thursday, the day in 1980 when an attempt by the Hunt brothers to corner the silver market came unstuck. 485,996 followers. Sr. Exploration Geologist CMDIC Collahuasi 2006 - 2007 1 year. MT. 1w. LME brokers and their clients were hit with margin call after margin call. Nickel Rim South Mine. At current prices, nickel would comprise 12% of Glencore's earnings before interest, tax, depreciation and amortisation (EBITDA) as well as 9% EBITDA for Anglo American and BHP, also listed in Johannesburg. The difference is that nickel is a commodity that touches the entire global economy. A decision to close out the 200,000-ton short position would result in a loss of about USD8 billion, the person said. China's manufacturing purchasing managers' index (PMI) climbed to 52.6 last month, the highest reading since April 2012. Feb 2021 - Dec 202111 months. The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. From a contractual perspective, you may be . 115 000 MT. Despite the recent upheaval, his company still remains the biggest in the nickel industry. Many producers, traders, and users of nickel with short positions on the LME were facing margin calls many times larger than they were prepared for. . Anyone using the LME needs to understand that. 39 000 MT. 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. Glencore is the world's biggest producer of cobalt, and is among the top three public copper companies and nickel companies. The tycoon long believed that because he was the worlds biggest player and had ultra-low costs, he could wield unprecedented influence over the nickel market, people familiar with the matter said. Glencore Headquarters. The head of one London metals brokerage recalls feeling sick as he watched the moves, realising what the spike in prices would mean for his company, the market, and the global metals industry. Those moves sent nickel to a record high of more than $US100,000 ($136,000) a tonne on Tuesday before trading was suspended. When prices rose above $US20,000 he would consider shorting nickel, the people said, because his production costs in Indonesia were as low as $US10,000 a tonne. Glencore is a leading producer and marketer of nickel globally and Wayne has responsibility for the operation of mines and processing facilities in Australia, New Caledonia, Canada and Norway. (via NewsDirect) Helix Resources Ltd (ASX:HLX) MD Mike Rosenstreich tells Proactive the company is ready to spin out its nickel and cobalt interests in the prolific Cobar Basin of NSW into a special-purpose vehicle aimed at maximising value for shareholders. Nickel rocketed to a record high above US$100,000 a tonne on Tuesday before trading was suspended; Tsingshan could have suffered well over US$2 billion of daily losses at the most extreme point of . For a while, it was unclear which view of the market would prevail. Even at that level, clients of LME brokers had failed to pay some $500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. Including positions on the London Metal Exchange and bilateral bets with banks, Xiang still has short holdings in the region of 150,000 tons, the people said. In August 2021, Glencore increased its medium-term emission reduction target to a 50% reduction by 2035 on 2019 levels and introduced a new short-term target of a 15% reduction by 2026 on 2019 levels. 100,000 a ton day is a story that encompasses Chinas emergence as a global behemoth... And their clients were hit with margin call after margin call after call. 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