Finance News on March 9th The sequel to the long-short war between China's "Nickel King" Qingshan Group and international commodity giant Swiss Glencore is here!
On the evening of the 9th, according to media reports, Qingshan Group responded that it would use its high-ice nickel to replace domestic metal nickel plates, and it has been allocated to sufficient spot for delivery through various channels. Analytical institutions generally believe that the long and short forces in the nickel futures market in London have reversed, and the aforementioned foreign capital who maliciously shorted may face the embarrassing situation of "shotting themselves in the foot".
Researcher said, "If the latest quotation of London Metal Exchange when trading was suspended on March 8, 80,000 USD/ lot (6 tons per lot), assuming that the company produces metal nickel in Indonesian is USD 10,000 USD/t. If the company can deliver 200,000 tons of metal nickel spot to foreign longs as scheduled, then each lot can obtain a gross profit of USD 20,000 USD, corresponding to a gross profit of USD 667 million.
Some market analysts believe that in March, the cash delivery was USD 49,990, 21,000 tons, and the loss of USD 600 million in forced positions was USD 600,000 in April 30,000 tons. After delivery, the contracts were also delivered, and a total of 180,000 tons would be held to death. Glencore .
Glencore forced Qingshan Group to take advantage of Qingshan Group
The cause of Qingshan Group's passive situation starts a month ago.
According to the media in February this year, it was reported that Xiang Guangda, the founder of Qingshan Holdings , and related business partners began to establish short positions last year, partly because Xiang Wan hedges production growth and believes that the upward momentum of nickel prices will fade. Qingshan 's production cost in Indonesia is less than US$10,000 per ton, while the benchmark price of LME exceeds US$23,000. Informed The person said that Qingshan has accumulated a large number of short positions in the nickel derivatives market to hedge the risk of their possible price decline in the nickel production process.
It is understood that data from the London Metal Exchange shows that an unknown nickel inventory holds at least half of the inventory on the London Metal Exchange (as of February 9, 2022). According to daily data from the London Exchange, this unknown inventor holds 50% to 80% of the nickel warehouse receipts monitored by LME. Holders of LME warehouse receipts can withdraw spots based on the warehouse receipts.
Market rumors that a Swiss Glencore Strata commodity trader forced a private Chinese enterprise on nickel.
It is worth noting What is meant that one of the major reasons for the forced position is LME's delivery system problem. Affected by the situation in Russia and Ukraine, Russian nickel was kicked out of the delivery scope by LME, and the 200,000-ton nickel short order issued by Qingshan Group may not be delivered.
In addition, the nickel products produced by Qingshan do not meet the delivery conditions of the futures contract with the London Metal Exchange (LME), which is also the reason why Qingshan Group will replace domestic metal nickel plates with its high ice nickel.
Institutions estimate that Qingshan Group may have a floating loss of about US$8 billion
On the 8th, an institution calculated based on holdings that Qingshan Group lost about US$8 billion. Rumors are that Qingshan Group is raising money to supplement the insurance, and the actual losses caused will still be announced by the company.
On the same day, Qingshan Industrial Xiang Guangda said: "Foreigners have indeed made some moves and are actively coordinating. After receiving many calls, relevant national departments and leaders are very supportive of Qingshan." Xiang Guang, chairman of Qingshan Industrial Board, said on the afternoon of March 8 that Qingshan is an excellent Chinese company, and there is no problem with position and operation.
LME takes action. All transactions are invalid on Tuesday
Faced with the severe market situation, LME begins to take action.
On the evening of the 8th, the London Metal Exchange issued a statement saying that it would cancel all nickel transactions executed in the select screen trading system of at 00:00 am on March 8, 2022 UK time (8:00 am on March 8, Beijing time) or afterwards. At the same time, the London Metal Exchange also stated that it would postpone the delivery of all spot nickel contracts originally scheduled for March 9, 2022.
The statement that LME cancels transactions means that all transactions will be invalidated on Tuesday!
A analyst from Wugang Group believes that "LME cancelled the transaction is not because of the two big players, but because the market has no liquidity anymore.All short positions of nickel will trigger the margin mechanism, and all positions will be closed and cannot be closed, and then it will also trigger positions of all varieties to be forced to be closed. After the short bulls are forced to set aside, no one will give them the longs' paper wealth. The bankruptcy of the brokerage company will lead to the collapse of LME and the entire world metal industry chain will collapse. Therefore, LME is a self-rescue behavior. ”
After, after nearly 80% surge on the 7th, the short squeeze on the 8th continued to take place. The increase in LME nickel prices once expanded to 100%, breaking the 60,000, 70,000, 80,000, 90,000 and 100,000 US dollars mark, and rose 248% in two trading days, continuing to set new record highs. Before the cancellation of the transaction, the LME nickel price was 80,000 US dollars/ton, up 59.05%.
Qingshan Holdings and Glencore
Data shows that Qingshan Holdings Group is headquartered in Wenzhou, Zhejiang. It is China's largest private steel enterprise and the world's largest stainless steel manufacturer, the world's nickel king. According to statistics, the mines acquired by Qingshan Holdings are 300,000 tons per year, which is almost half of China's annual nickel production, accounting for 12% of the world's annual nickel equivalent, and its production capacity ranks first among the world's mining companies, making Qingshan Holdings not only the world's largest stainless steel producer, but also the world's first nickel production capacity. Qingshan Holdings Group is a Fortune 500 company, ranking 279th.
Commodity giant Glencore is the largest enterprise in Switzerland , with operating income of up to US$215.11 billion. Glencore was established in 1974 and is a world's leading commodity producer and operator, covering the supply of mineral products, energy products and agricultural products.
Shanghai Futures Exchange: suspending trading of part of nickel futures contracts for one day
As the international market soared, Shanghai Nickel (267700, 38890.00, 17.00%) main contracts hit the daily limit for three consecutive boards. In just three trading days, Shanghai nickel rose from 187,190 yuan/ton to 267,700 yuan/ton, a sharp increase of 43%.
Faced with this situation, the Shanghai Futures Exchange announced that it would suspend trading of some nickel futures contracts for one day. When the closing settlement on March 9th, the daily limit of NI2204, NI2205, NI2206, NI2207, NI2209, NI2212, and NI2301 contracts remained at 17%, and the trading margin ratio remained at 19%. From the evening trading on March 9th, NI2204, NI2205, NI2206, NI2207, NI2209, NI2212, and NI2301 contracts were suspended for one day.
What is the "forced position" in the futures market?
"Trust position" refers to the act of futures exchange members or customers who use their financial advantages to control futures trading positions or monopolize spot goods available for delivery, deliberately raise or lower the futures market prices, over-hold positions and delivery, forcing the other party to default or close positions at unfavorable prices to make huge profits. According to different operating methods, it can be divided into two ways: "long short squeeze" and "short short squeeze" and "short short squeeze".
"Long short squeeze" refers to the behavior of manipulators who expect that spot goods available for delivery are insufficient, that is, relying on the advantages of capital, establish sufficient long positions in the futures market to raise the futures price, and at the same time, acquire and hoard spot prices in large quantities. The shorts buy back the futures contract at a high price and accept the loss and close the position and exit, or buy spot at a high price for physical delivery, or even receive a fine for breach of contract for inability to deliver. At this point, holders of long positions can make huge profits from it.
Original title: Counterattack international giants? Losing $8 billion to making $667 million? China's "nickel king" has confidence! The spot is sufficient, and the Shanghai Futures Exchange can't sit still.
Source: Financial World, Sina Finance
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