Those past scandals forced reforms on the exchange. 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. Short-covering trades made last week by the Chinese billionaire contributed to a swift, huge surge. Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks. They had offset their deals with Tsingshan by placing their own short positions on the LME. Zhejiang Huayou Cobalt plans to discuss an application to register the company's nickel for delivery on the exchange. Its unclear whether he will get his way. Tsingshan has said it has secured facilities with its consortium banks and will exit its position in an orderly manner. 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. In response to the crisis, the LME suspended nickel trading on 8 March and cancelled all trades executed on or after 00:00 UK time on 8 March 2022 in the inter-office market and on LMEselect (LME online trading platform) until further notice.. Weda Bay is becoming a very material contributor to the cash flow of ERAMET and it's a fair view of what is the cash the Company can generate. At $2,250 a tonne, the capital required on 300,000 tonnes of nickel would be $675 million, according to Reuters calculations. Yet the day before, the market had started to unravel, with prices rising by astunning66 per cent to US$48,078. 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. 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. The new historic high is nearly twice the previous record of $51,600 in 2007. He ranked 235th on the 2021 Hurun's China rich list, which puts his net worth closer to $4.2 . Nickel prices have since fallen and the three-month nickel last settled at $23,371/tonne on 3 November. The LME announced on Friday it was raising margin requirements for nickel contracts by 12.5% to $2,250 a tonne. The price was frozen, below the record high but still at US$80,000 a ton. Known as Big Shot in China for his imposing presence in the metal industry, Xiang Guangda, the founder of the worlds 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 one-eighth of all of the LMEs outstanding contracts at its peak. 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. Now, the traders watched with a mixture of horror and grim fascination as the price went vertical. 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 . Given that JPMorgan was reported as the biggest trading counterparty against which Tsingshans nickel trades were made, the US bank led the subsequent agreement to arrange a rescue credit facility, secured from various lenders, including China Construction Bank (CCB), to help the Chinese nickel giant address its immediate liquidity squeeze. 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. 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This will allow the trader to buy the security back at a lower price, return it to the lender and hopefully pocket a handsome profit. Tsingshan agreed standstill with JPMorgan-led group of banks, Talks continue on loan facility to backstop short position. They held a hurried call on Monday evening, but decided to allow the nickel market to continue trading. Executives from Goldman Sachs Group Inc. voiced their displeasure at the decision on a call with Chamberlain. 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. But its extremely unusual for an exchange to cancel whole sessions of trading after the fact. Founded back in 1877 and now owned by Hong Kong Exchanges & Clearing (HKEX), the LME performs a critical role in determining benchmark prices for the global metals industry and provides a liquid market venue for financial institutions to make money. 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. In an earlier interview with Chinese news outlet Yicai, Xiang blamed "foreigners making some moves" for nickel's price spike. The LME convened its special committee, a small group of metals and legal experts with the power to issue emergency rules for the market. Several large brokers got margin calls of close to US$1 billion each over the course of the day. 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The seeds of the epic short squeeze were sown last year, when nickel, like all commodities, was rallying from its COVID-era low. Assessing the Incremental Costs of Regulation and Supervision Faced by EU Banks Compared to Their US Peers, Interview with Mr. lvaro Saboro, Chief Executive Officer, Grupo Financiero BCT. That would come on top of any losses incurred by the tycoon since he began building the short position late last year through closely held Tsingshan. Tsingshan yang dimiliki oleh swasta secara harfiah memiliki arti "gunung hijau", berbasis di kota Wenzhou di China dan memiliki . Assessing the Incremental Costs of Regulation and Supervision Faced by Next-Gen Operating Models for Bankers and Advisors, Macroprudential Policy and Real Estate Funds. Why bet against nickel when you have a nickel business? See here for a complete list of exchanges and delays. But its obligations dwarfed its available cash and bank credit. Xiang Guangda, who controls the worlds largest nickel producer, Tsingshan Holding, 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. Neither party seems very keen on this idea, however. Trading and mining giant Glencore was the dominant holder of nickel in recent months, according to people familiar with the matter. Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts. Not surprisingly, investors have not been particularly satisfied with the LMEs actionsor lack thereofin allowing this situation to transpire. 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 . 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 . 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. NIC's operations and cash flow remained stable in 2022 despite Tsingshan's significant loss on its nickel short position in March 2022. Everything changed when Russia invaded Ukraine. For a while, it wasunclear which view of the market would prevail. To gauge the magnitude of the problem, an unnamed source familiar with the trades told the, 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 16, 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, 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, Manuel A. Muoz European Central Bank (ECB), Miguel Moreno Tripp EGADE Business School | Crowe Global, Flix Villatoro Universidad Adolfo Ibez Business School, Kenneth D. Simonson Associated General Contractors of America (AGC), Dalia A. Kader Commercial International Bank (CIB), Davi Ferreira Veronese University of So Paulo, Maria Paula Bertran University of So Paulo, Thanos Andrikopoulos University of Hull, Tim Johnson JB Super Yachts | TJB Private Travel. 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. Tsingshan has been finding it difficult to pay margin calls to its creditors, the report said. The question is, will it continue to fail? Ghali posited to CNN. The Morowali park mainly produces nickel pig iron for stainless steel. 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. If nickel prices stay lofty it could complicate the energy transition with electric vehicle batteries costing more to produce. 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. That put Tsingshans banks and brokers, which include JPMorgan Chase, BNP Paribas, and Standard Chartered,in a bind. Among them were some of the biggest names on Wall Street. The short squeeze gathered momentum as Chinas Tsingshan Holding Group Co. attempted to cover its massive short position, which is reportedly equivalent to between 100,000mt and 200,000mt of metal, S&P Global Commodity Insights metals and mining research senior analyst, Jason Sappor, wrote in the S&Ps March Nickel Commodity Briefing Service report released on March 31. Credit: INF News.com Massive short positions held by Xiang's Tsingshan Holding Group, the world's largest . . Late Tuesday, the exchange said it anticipates trading wont resume before Friday. Bloombergs Joe Deaux reports. 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. The arrangement will also help the pave the way for the London Metal Exchange to restart nickel trading, they said. 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