tsingshan nickel margin call

The extra charge kicks in at close of business on Tuesday. 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 . Nickel trading resumed on 16 March 2022. Weve received a lot of phone calls today, he said. [2] It moved into the Indonesian nickel industry in 2009. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. Trimegah menilai bisa. As the price rose through the London day after offices in Asia had closed, Tsingshan started struggling to pay, the people say. Mr Xiang began building the short position in part because he wanted to hedge rising output, but also because he believed the rally in nickel prices would fade this year. But since last year, Tsingshan has also started to produce a source of nickel for batteries. read more. Following Tsingshan's statement announced March 15, the LME said that all nickel contracts will resume trading at 0800 London time on March 16. Undeterred, the Chinese tycoon has told banks he wants tomaintain his position, and has asked them to keep funding him despite the losses. Pleased to report an extremely strong year for the Nickel Industries and the. It granted extra time on March 7th to CCBI Global, a Chinese broker for Tsingshan that is a member of the LME, to raise funds from its state-owned parent, China Construction Bank, to cover. As of the evening of March 13, the LME had yet to announce a date for nickel trading to resume. Our fundamental responsibility is market stability, he told Bloomberg TV. All quotes delayed a minimum of 15 minutes. (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 . LME brokers and their clients were hit with margin call after margin call. Prices for the metal, used in stainless steel and electric vehicle batteries, were last in that range in December. The banks declined comment or did not respond to a request for comment. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. 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. It got to a point where there were things going on which were not normal market forces. Daniel Ghali, director of commodities strategy at TD Securities, meanwhile, believes the worlds pricing mechanism for nickel is failing. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. 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 . Why bet against nickel when you have a nickel business? 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. Tsingshan Holding Group held the biggest short position for nickel on the LME. See here for a complete list of exchanges and delays. Still, this weeks short squeeze is nonetheless likely to push costs higher for battery companies and stainless steel makers, eventually feeding through into the price of everyday goods. Capital Com Online Investments Ltd is a limited liability company with company number 209236B. Nickel prices have since fallen and the three-month nickel last settled at $23,371/tonne on 3 November. The creditors involved include both local and intentional banks, including J.P. Morgan and China Construction Bank . 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. LMEs Chamberlain defended canceling the trades. 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 However, the short position holders have to pay a margin. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright International Banker 2023 | All Rights Reserved Subscription | About us | Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. Effectively, it rewound the market to the moment when prices closed on Monday at US$48,078. Contact us | 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. Our Standards: The Thomson Reuters Trust Principles. And that was just for the portion of the short position it held directly on the exchangeabout 30,000 tons. Xiangs short position has now racked upbillions of dollars in losses. As the market was picking up on the short squeeze of Tsingshan, the LME had decided to intervene. Anyone using the LME needs to understand that. For a while, it wasunclear which view of the market would prevail. our Subscriber Agreement and by copyright law. At that time of day, bleary-eyed traders are typically just glancing at prices as they swig coffee on their way to the office. Reuters could not determine how large Tsingshan's short position currently is after it cut its exposure. 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. The major market events for the week ahead right in your inbox. Follow the topics, people and companies that matter to you. 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. It should be mentioned that nickel had already rallied to $25,000 in January before easing off by the end of the month. . 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. 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. Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile. For the fourth quarter, the company expects to generate "high single-digit. 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. "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 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 . See here for a complete list of exchanges and delays. The prices that were being seen during that Asian session were becoming disconnected from, I believe, physical reality.. 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. You should do your own research, looking at the latest news, technical analysis, and analyst commentary before trading. 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. Moscow's invasion of Ukraine and the west's moves to sanction Russia, a key major supplier, have electrified an already bullish nickel market. 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. Xiang Guangda in 2017. All quotes delayed a minimum of 15 minutes. Nickel short interest was created by Tsingshan. 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. 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. a practice known in financial markets as margin calls. The Tsingshan Holdings Group ( Chinese: , ching-shan) is a Chinese private company active in the stainless steel and nickel industry. 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 exact scenario emerged in early March in the LMEs nickel market following the escalation of the Russia-Ukraine military conflict, with Chinese nickel-maker Tsingshan Holding Group the unfortunate short seller in this episode. 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 . That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. But nothing could prepare the market for what was about to follow, with the Russia-Ukraine conflict sending prices skywards on global supply concerns. 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. 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. 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. 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. Erin Jonasson. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. 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