tsingshan nickel margin call

A stressful week in markets got even worse for some metals traders when the main exchange's software misfired by generating erroneous margin calls, adding to the chaos at a time when brokers . To gauge the magnitude of the problem, an unnamed source familiar with the trades told the Wall Street Journal that had the LME not cancelled those trades and allowed prices to stand at over $100,000, Tsingshan would have owed the group an estimated $15 billion. This copy is for your personal, non-commercial use only. The question is, will it continue to fail? Ghali posited to CNN. Creditors and banks who acted for Tsingshan were demanding margin settlements and the closing of all positions. Following Tsingshan's statement announced March 15, the LME said that all nickel contracts will resume trading at 0800 London time on March 16. Mr Xiang told Chinese news outlet Yicai that Tsingshan did not have any problems with its nickel trading. 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%. 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. read more. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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. 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. Traders must deposit cash,. Distribution and use of this material are governed by The sharp increase in nickel prices was driven by supply concern exacerbated by Russias invsion of Ukraine Russia is the third largest primary nickel producer after Indonesia and China. 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. 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. Your decision to trade should depend on your attitude to risk, expertise in the market, the spread of your portfolio and how comfortable you feel about losing money. 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. 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. The LME did not put it into default, instead giving it more time to pay. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. Prices for the metal, used in stainless steel and electric vehicle batteries, were last in that range in December. Exchanges. The wild rise of nickel drew comparisons to the short squeezes in meme stocks such as GameStop Corp. that gripped retail investors for much of last year. The price continued to climb higher as one of the world's largest nickel producers, Russia decided to invade Ukraine. The most notable holder of short positions is Tsingshan Holdings - one of the world's largest nickel and stainless steel producers - which is believed to own positions on about 100,000 tons of nickel with paper losses totaling up to $8 billion before the London Metal Exchange halted trading. Save my name, email, and website in this browser for the next time I comment. Only you can decide whether nickel is a good buy or not. A short position is created when a trader sells a security he does not own, with the intention of repurchasing it later at a lower price. our Subscriber Agreement and by copyright law. read more. For non-personal use or to order multiple copies, please contact 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. But the Eastern European conflict also saw sizeable long positions enter the market, including major buyers Volkswagen, Glencore and JPMorgan, which instead drove prices higher. Even at that level, clients of LME brokers had failed to pay some US$500 million of margin calls in relation to their short positions on the exchange, according to a person familiar with the matter. Forbes places Xiang's real-time net worth at $1.2 billion. Just after 6 a.m., the price of nickel passed US$100,000 a ton. But its obligations dwarfed its available cash and bank credit. Most market participants expect nickel prices to come back down once the crisis around Xiangs position has been resolved. But recent events have certainly injected a dose of volatility into the market. Executives from Goldman Sachs Group Inc. voiced their displeasure at the decision on a call with Chamberlain. Its nickel matte production in Indonesia is nearly 8,000 tonnes per month, according to the Shanghai Securities News. 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. 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. Tsingshan debacle exposes weak underbelly of LME. Now, people familiar with the matter say, the exchange is likely to introduce such measures as position limits and greater transparency. 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 thus desperately scrambled to buy nickel to cover its short position, which only added further upward pressure on prices. 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. 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. The Initial Margin was $20,000 per contract. Prices doubled to a record above $100,000 per tonne in a matter of hours on Tuesday, prompting the London Metal Exchange (LME) to halt trading. 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. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. 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 . The LME suspended trading in nickel on Tuesday morning after one of the most dramatic price spikes in commodity market history. Tsingshan accounted for about half that amount. 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. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. (Podcast). 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 . Prices of oil, gas, wheat and a range of metals, including aluminium and palladium, have soared since the invasion, ramping up costs for companies and consumers and threatening the nascent recovery from the coronavirus pandemic. Chinese entrepreneur Xiang Guangda has been caught out by nickel's price surge. At 8:15 a.m., the screens stopped flashing, hours before the in-person pit trading session was even set to begin. . But the effects of the short squeeze are likely to be felt in other ways. If you are considering investing or trading nickel, its important to do your own research. Four or five of the brokerages that are LME members would have failed, a shock that could have devastated the global metals industry. 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. Pada titik ini, posisi short Tsingshan dibekukan. Until yesterday, it appeared that a bailout plan for Chinese stainless steel titan Tsingshan Holding Group owned by "Big Shot" Xiang Guangda (and which was facing an $8 billion nickel margin call following the explosive surge in Nickel prices which briefly soared above $100,000/ton up 4x in just a few days, or would be if the Hong Kong-owned LME ever reopened Nickel trading) was coming along . Trimegah menilai bisa. "For the period of the standstill, the participating hedge banks agree not to close out positions against Tsingshan or to make further margin calls in respect of existing positions. The XM Research Desk, manned by market expert professionals, provides live daily updates on all the major events of the global markets in the form of market reviews, forex news, technical analysis, investment topics, daily outlook and daily vidoes. We expect the EBITDA margin to be around . As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. Then in . Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. Our Standards: The Thomson Reuters Trust Principles. 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 . But this week the rally became a melt-up, with prices surging as much as 250 per cent in little more than 24 hours, to an all-time high of $US101,365 a tonne. 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. This was the most disorderly move in a metal Ive seen in my career, says Mark Hansen, chief executive officer of trading house Concord Resources Ltd. We had a frenzy based on speculation that accelerated on Monday and Tuesday. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Some aggrieved traders are already preparing to take legal action against the exchange. Tsingshan, among other Chinese companies, is ramping up a wave of new battery-grade nickel capacity in Indonesia. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. . Some started hurrying to buy back nickel contracts, sending the price of nickel spiraling ever higher. See here for a complete list of exchanges and delays. Our Standards: The Thomson Reuters Trust Principles. During the standstill agreement, the company and banks will discuss a standby secured liquidity facility, Tsingshan said. Tsingshan has said it has secured facilities with its consortium banks and will exit its position in an orderly manner. articles a month for anyone to read, even non-subscribers! It was 5:42 a.m. on March 8 in London when the nickel market broke. read more. Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. China's Tsingshan Holding Group has reached agreements with two companies to swap its . Box N-4865, Nassau, Bahamas. For non-personal use or to order multiple copies, please contact Is the US Finally Warming to the Possibility of Creating a CBDC? Join the 500.000+ traders worldwide that chose to trade with Capital.com, Also you can contact us: Despite that, reserves that can be economically mined are limited. On the London Metal Exchange, the premier trading and price-formation venue for industrial metals, nickel traded between $10,000 and $20,000 per metric ton and moved about $100 each day. Given our role in supervising the LME, we have been, and will continue to be, taking a very close interest in how it is managing and responding to the issues, the FCA confirmed in late March. The industry leader for online information for tax, accounting and finance professionals. 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. Production in Indonesia per month, according to the Shanghai Securities news a hurried call on evening... 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