In the early morning of March 15th, Beijing time, "Tsingshan Industrial" issued an "Important Statement", which stated that Tsingshan Group had reached a silent agreement with a syndicate composed of futures bank creditors.

said, "If calculated based on the latest quote of US$80,000/lot (6 tons per lot) when the London Metal Exchange suspended trading on March 8, it is assumed that the cost of nickel metal produced by the company in Indonesia is US$10,000/ton. . If the company can deliver all 200,000 tons of nickel metal to foreign investors as scheduled, it can earn a gross profit of US$20,000 per lot, which corresponds to a gross profit of US$667 million for 200,000 tons.

Later, it was reported that the country Reserve Nickel and Jinchuan Group joined forces to help Tsingshan Group. Tsingshan Group used its own high-ice nickel to replace the nickel plate of the State Reserve and Jinchuan Group that meets the delivery requirements of the London Financial Exchange.

In response to "Jinchuan produces nickel for spot delivery". According to the statement, relevant personnel of Jinchuan Group responded that the online news about the company helping Qingshan to raise spot goods is a rumor. If it is true, the company will announce it on the official website. "We don't know where Qingshan raised the spot from, and we are powerless even if we want to help it." , Jinchuan's nickel production capacity is about 100,000 tons a year, and the company's production and operations are currently normal. "

Institutions estimate that Tsingshan Group may have a floating loss of around US$8 billion

Some institutions have previously calculated that Tsingshan Group has a floating loss of around US$8 billion based on its positions. It is rumored that Tsingshan Group is now raising money to cover insurance. The specific actual losses have yet to be announced by the company.

JPMorgan Chase holds 50,000 tons of nickel short orders for Tsingshan. Many Chinese and foreign banks are involved

According to reports, in the unprecedented short squeeze of LME nickel, in addition to the previously reported short side Tsingshan Holding Group, including Many domestic and foreign banks and brokers, including JP Morgan Chase, a well-known Wall Street investment bank, have also been involved.

According to people familiar with the matter, of Tsingshan’s more than 150,000 tons of nickel short positions, about 50,000 tons are held through an over-the-counter position at JPMorgan Chase. Based on this figure, Tsingshan Holdings Group should owe JPMorgan about $1 billion in margin on Monday.

JP Morgan currently holds the largest single short position on the London Metal Exchange. It should be noted that the position is for client business, and there is no indication that the bank is shorting nickel prices.

The above-mentioned people familiar with the matter said that JPMorgan Chase is currently leading Tsingshan Holdings actual controller Xiang Guangda to negotiate with about 10 banks and brokers. Tsingshan’s nickel short position is held through these ten banks and brokers. . These banks and brokerages include BNP Paribas, Standard Chartered Bank , CCB International , ICBC Standard, UOB and DBS Group.

LME had taken action on March 8th and all transactions were invalidated

LME’s statement of canceling transactions means that all transactions on Tuesday are invalid! Before the transaction was canceled, the LME nickel price was quoted at US$80,000/ton, a sharp increase of 59.05%.

Glencore forced Tsingshan Group

to cause Tsingshan Group to be in such a passive situation. It started a month ago.

According to media reports in February this year, it was reported that Xiang Guangda, founder of Tsingshan Holdings, and related business partners began to establish short positions last year, partly because Xiang wanted to hedge production growth with and believed that the rising momentum of nickel prices would subside. . Tsingshan's production costs in Indonesia are less than US$10,000 per ton, while the LME's benchmark price is more than US$23,000. People familiar with the matter said Tsingshan has accumulated large short positions in the nickel derivatives market to hedge their risk of possible price declines in the nickel production process.

It is understood that London Metal Exchange data shows that there is an unidentified nickel inventory holder who holds at least half of the London Metal Exchange's inventory (as of February 9, 2022). The unidentified stockist holds 50% to 80% of the nickel warehouse receipts monitored by the LME, according to daily data from the London exchange. Holders of LME warehouse receipts can withdraw spot goods based on the warehouse receipts.

Market rumors indicate that Swiss Glencore Xstrata commodities traders are taking a short position on a Chinese private enterprise on nickel.

It should be noted that one of the major reasons for the squeeze is the delivery system of the LME. Affected by the situation in Russia and Ukraine, Russian nickel was kicked out of the delivery range by the LME, and the 200,000-ton nickel short order opened by Tsingshan Group may not be able to deliver spot goods.

In addition, the nickel products produced by Tsingshan do not meet the delivery conditions of the London Metal Exchange (LME) futures contract, which is why Tsingshan Group will replace domestic metal nickel plates with its high-marine nickel.

Tsingshan Holdings and Glencore

Information shows that Tsingshan Holdings Group is headquartered in Wenzhou, Zhejiang. It is China's largest private steel company, the world's largest stainless steel manufacturer, and the world's nickel king. According to statistics, the annual nickel output of the mine

acquired by Tsingshan Holdings is 300,000 tons, which is almost half of China’s annual nickel output and accounts for 12% of the world’s annual nickel equivalent. Its production capacity ranks first among global mining companies, making Tsingshan Holdings not only a The world's largest stainless steel producer has also become the world's largest nickel production capacity company. Tsingshan Holding Group is one of the world's top 500 companies, ranking 279th.

Commodity giant Glencore is the largest company in Switzerland , with operating income of US$215.11 billion. Founded in 1974, Glencore is the world's leading commodity manufacturer and operator, with its business scope covering the supply of mineral products, energy products and agricultural products.

International speculators have hunted Chinese companies many times in the futures market

"Zhuye" incident

In fact, international speculators have hunted Chinese companies many times in the futures market.

As early as 1997, there was an excessive short squeeze on the London Metal Exchange (LME). Most of the short positions at that time were in the hands of the Chinese, and the "Zhuzhou Metallurgical Industry" incident ultimately caused a huge loss of nearly 1.5 billion yuan.

In 1997, a staff member of Zhuzhou Metallurgical Industry Co., Ltd., who had been trading in the international futures market for two years, exceeded his authority by conducting overdraft transactions and short-selling a large number of zinc futures contracts on the LME. His position far exceeded the established futures trading plan and was targeted by foreign financial institutions. And a squeeze occurs. When the

incident was exposed, it had sold 450,000 tons of zinc in the LME market, while Zhuzhou Smelter's total annual output at that time was only 300,000 tons. After the

incident, the person in charge of the relevant competent department personally visited the factory for nearly a month. While taking measures such as position stop loss, margin call , and reasonable rescheduling to deal with the position urgently, he also mobilized personnel from other zinc plants through various channels. Source goods, organize delivery, and strive to minimize losses.

However, because the selling position was too large, he had to buy part of the contract at a high price to close the position and fulfill the contract. In the six or seven months starting from the beginning of 1997, bulls pushed up the London zinc price by more than 50%. This resulted in Zhuzhou Metallurgical Industry's losses reaching more than 175.8 million U.S. dollars, equivalent to more than 1.4591 billion yuan, within 3 days of the final concentrated closing of positions. .

State Reserve Copper Incident

In 2005, China’s State Reserve (hereinafter referred to as the State Reserve) and International Fund had a fierce showdown on Lun Copper futures. In this duel, international funds continued to short the State Reserve, while the State Reserve continued to recover losses by selling domestic spot stocks.

The key figure in this incident, Liu Qibing, received a six-month internship at the London Metal Exchange in 1995. During this period, he helped establish a computer network connecting the London Metal Exchange and the National Material Reserve Administration. In 1998, the State Reserve conducted its own futures business through the LME, and Liu Qibing was responsible for the implementation of the specific work.

In 2003, before the bull market in the copper futures market started, Liu Qibing began to take large positions. At this time, the international copper price rose from more than 1,000 US dollars per ton to 3,000 US dollars, and Liu Qibing brought considerable profits to the adjustment center. But when the international copper price reached a new high of US$3,000, Liu Qibing went against the norm and began to decide to go short. Some people once tried to dissuade him from giving up shorting, but he was always determined. In October 2004, after the LME copper price plummeted 10% in one day, Liu Qibing decided to make a last ditch effort and overstepped his rights in his structured option portfolio by selling a large number of call options . However, the international copper price did not go as he expected. Instead, it climbed higher and directly exceeded US$4,000 per ton. At this time, Liu Qibing's book loss had reached US$606 million. In mid-November of that year, Liu Qibing left a letter and disappeared.

If international funds succeed in forcing positions at this time, the State Reserve may suffer huge losses on this short contract. To this end, the State Reserve has launched a defense war against international funds.

In order to save a large number of overseas short positions, the State Reserve, which had previously acted very low-key, frequently made high-profile appearances within two months: In October of that year, it began to increase inventory at the Shanghai Futures Exchange . On November 11, an official from the State Reserve It is claimed that the current copper storage capacity of the State Reserve is 1.3 million tons, which is far higher than the previous market estimate of 300,000 tons.

For four consecutive weeks starting from November 16, the State Reserve has sold 20,000 tons of spot goods through auctions in the domestic spot market every week. The intentions of these remarks and measures by the State Reserve are very obvious, and they are all beneficial to short sellers. But contrary to expectations, copper prices are still rising further.

In addition to selling copper in the domestic spot market, the State Reserve is also very high-profile in the futures market. According to foreign reports, on the evening of November 16, 2004, the State Reserve applied to the State Council to export 200,000 tons of copper. This figure is consistent with the rumored short position established by the State Reserve in the LME. Under this rumor, the LME three-month copper price fell by nearly 40 US dollars per ton to the level of 4,075 US dollars, but soon rose back to the original price. Subsequently, news came from Ningbo Port that before the contract was delivered, the State Reserve had shipped more than 30,000 tons of Jiangxi Copper (copper produced by Jiangxi Copper) to the LME warehouse in Singapore. At the same time, the State Reserve also placed nearly 40,000 tons of short orders on the December 2004 and January 2005 contracts in the Shanghai copper market. Judging from the information coming out of the Shanghai Copper Delivery Warehouse, these short contracts will be delivered, and the State Reserve has already transported 40,000 tons of copper into the warehouse.

The State Reserve has auctioned copper on the spot market four times, but the results have been counterproductive. The auction floor price has continued to rise, and copper futures prices have continued to rise. On December 2, 2004, the price of LME copper three-month copper futures climbed to US$4,445 per ton.

The evening of December 7 is the announcement day for Lun Copper options. On this day, both parties to the transaction need to decide whether to give up or execute the options in their hands. Copper prices on that day were still trading sideways above $4,400. According to the rules of short squeeze in the futures market, only when the copper price returns to its rational price can the official end of this battle be declared. The State Reserve's strategy of selling copper in the domestic spot market and recovering losses before December 21 (the expiration date of its 200,000-ton short position) failed.

Finally, in October 2005, Liu Qibing was captured and brought to justice in Yunnan. The court ruled that because Liu Qibing violated the relevant national regulations on futures trading by state-owned entities and used the funds of the state reserve for overseas non-hedging futures trading without authorization, resulting in a loss of RMB 920 million for the Material Reserve Regulation Center of the National Development and Reform Commission, he was awarded the order. 7 years in prison. At this point, the State Reserve Copper incident has come to an end.

What is the "force" in the futures market?

"Forcing" means that members or customers of futures exchanges use their financial advantages to deliberately raise or lower futures market prices by controlling futures trading positions or monopolizing spot commodities available for delivery, holding excessive positions and delivering, forcing the other party to default or default. The act of closing a position at an unfavorable price to make huge profits. According to different operating techniques, it can be divided into two methods: "long squeeze short" and "short squeeze long".

"Long and short squeeze" means that when market manipulators expect that there will be insufficient spot commodities for delivery, they use their financial advantages to establish sufficient long positions in the futures market to drive up futures prices, and at the same time, they purchase and hoard large amounts of spot goods to drive up prices. . The short sellers are forced to buy back the futures contract at a high price and close out the position, or buy spot goods at a high price for physical delivery, or even be fined for breach of contract due to failure to deliver. At this point, long position holders can make huge profits from it.

This article comes from the financial website