tsingshan nickel margin calltsingshan nickel margin call

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. 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. 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 . Xiang didnt believe the rally would last. Forbes places Xiang's real-time net worth at $1.2 billion. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Why? Advertise | Careers | Editorial Guidelines | That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. Tsingshan has been struggling to pay margin calls to its brokers, according to people familiar with the situation. Everything changed when Russia invaded Ukraine. Reuters, the news and media division of Thomson Reuters, is the worlds largest multimedia news provider, reaching billions of people worldwide every day. People forgot that this isnt a video game retailer; its an important physical commodity.. read more. Nickel prices shot up as much as 250% in two days on the LME at the start of this week. . People familiar with the discussions said the exchange would ideally prefer to wait until Xiang has reached a resolution with his banks and brokers. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. Nickel prices have since fallen and the three-month nickel last settled at $23,371/tonne on 3 November. Those past scandals forced reforms on the exchange. Privacy Policy | 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. It should be mentioned that nickel had already rallied to $25,000 in January before easing off by the end of the month. At the center of the action is Chinese nickel titan Tsingshan Holding Group, the worlds biggest producer of a metal used in stainless steel and .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;}electric-vehicle batteries. Nickel trading resumed on 16 March 2022. Solugen Bio has built a chemical plant that produces all manner of chemical-based products using bio-based feedstock instead of fossil fuels. articles a month for anyone to read, even non-subscribers! By early this year, it had taken ownership of more than half of the available nickel in LME warehouses. 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. 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. "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. Xiang wanted to increase Tsingshans production dramatically by producing so-callednickel matte. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers. The question is, will it continue to fail? Ghali posited to CNN. Not surprisingly, investors have not been particularly satisfied with the LMEs actionsor lack thereofin allowing this situation to transpire. 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. 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. Exchanges sometimes cancel trades when technology glitches or fat fingers cause one-off mistakes. Russia is the worlds third-largest producer of nickel and its largest exporter of refined nickel metalthe type deliverable on the LME. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. Last chance for up to $40 off TurboTax, All Jeans + Pants 25% off! You should do your own research, looking at the latest news, technical analysis, and analyst commentary before trading. 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. Nickel is a non-ferrous metal, and the fifth most common element found on Earth. Its nickel matte production in Indonesia is nearly 8,000 tonnes per month, according to the Shanghai Securities News. LME brokers and their clients were hit with margin call after margin call. . A sharp surge in nickel prices triggered margin call fears at the London Metal Exchange which suspended trading after prices doubled in hours. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. 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. 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 . Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs. If nickel prices stay lofty it could complicate the energy transition with electric vehicle batteries costing more to produce. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. LME brokers and their clients were hit with margin call after margin call. 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. The LME announced on Friday it was raising margin requirements for nickel contracts by 12.5% to $2,250 a tonne. 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. 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. 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. read more. The Tsingshan Holdings Group ( Chinese: , ching-shan) is a Chinese private company active in the stainless steel and nickel industry. Why? Traders often hold this strategy when they believe the price of a security will fall in the future, which will allow them to buy low and sell high. 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. Copyright | On February 22, 2023, Yangjiang News, at the "New Track, Great Future--Qingshan S32001 Duplex Steel Channel Market Launch Conference" hosted by Qingyi Steel Some hedge funds were buying nickel contracts in a bet on the electric vehicle boom. You should never trade more than you can afford to lose. Join the 500.000+ traders worldwide that chose to trade with Capital.com, Also you can contact us: Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology. At the current price of nickel, the brokers themselves wouldnt be able to pay their margin calls, they told the LME. Xiang Guangda in 2017. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright International Banker 2023 | All Rights Reserved Subscription | About us | 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. 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. Despite that, reserves that can be economically mined are limited. Traders must deposit cash,. 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. 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. Why is nickel going up so drastically in a short period of time? Only you can decide whether nickel is a good buy or not. 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. In the meantime, the nickel market is on ice, with traders unable to exit their positions, and many billions of dollars tied up in margin calls. Its also one of the most important raw materials needed inmaking batteriesfor electric vehicles. Now they had to pay big margin calls on the exchange while receiving no margin from their client. Some think this could herald the end of the exchange itself. The LME suspended trading in nickel on Tuesday morning after one of the most dramatic price spikes in commodity market history. Neither party seems very keen on this idea, however. Others in the market may also push up prices in anticipation of that short covering. Executives at Tower Research Capital, one of Wall Streets oldest electronic market-makers, reined in its trading activity on the LME and put its membership in the exchange under review. Tsingshan is also a nickel miner and operates nickel pig iron mines and production facilities. The LME at the end of the day is a physical metal market, he says. The super spike was driven by holders of short positions, including Tsingshan and its brokers, rushing to close them out. 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. Box N-4865, Nassau, Bahamas. 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. Anyone using the LME needs to understand that. At 1 a.m. on Tuesday, the market opened. The price continued to climb higher as one of the world's largest nickel producers, Russia decided to invade Ukraine. 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's 2022 nickel equivalent output is . For participants in commodities exchanges, a price rally is not necessarily good news. Worse, the chaos was spreading to other markets: Zinc prices spiked 15 per cent in a few minutes to a record high, only to collapse again. By now, Tsingshan wasnt the only nickel company that was strugglingjust the biggest. Help using this website - Accessibility statement. 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. 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. Our Standards: The Thomson Reuters Trust Principles. Its been under growing pressure to meet the payments in recent days, the people said. The London Metal Exchange plans to resume trading in nickel, a week after it was suspended when the price of the metal surged to over $100,000 a ton. 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. 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. 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. & # x27 ; s 2022 nickel equivalent output is for nickel contracts by 12.5 % to $ a. And their clients were hit with margin call entities globally to help uncover hidden risks in relationships. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts Chinese: ching-shan... 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