The London Metal Exchange (LME) will resume nickel market trading at 8:00 am London time (16:00 Taiwan time) on the 16th. Tsingshan Holdings, the mainland nickel mine giant, which was hit by a huge short squeeze last week and caused the LME to announce the suspension of nickel trading, has reached an agreement with the bank consortium to temporarily avoid margin calls.
In addition, the LME announced that it will implement a 15% one-day limit on price fluctuations for other metals other than nickel from the 15th, and will confirm the price fluctuation limit of nickel later.
Before the LME announced the resumption of nickel trading, Tsingshan Holdings, controlled by Chinese nickel tycoon Xiang Guangda, which caused market volatility last week, announced that it had reached a standstill agreement with banks to avoid being called for more changes. More margin, a move that will reduce the risk of a repeat short squeeze when the nickel market reopens.
The LME said in an announcement to members late on Monday (14th) that the bank's support for Tsingshan Holdings represented a reduction in the likelihood of further market disorder. The LME also announced new restrictions on trading, including a daily limit of 15% for most metals, to prevent further sharp price swings in the future.
The resumption of trading in the London nickel market has put an end to one of the craziest weeks in the history of metals, after nickel prices soared by 250% in less than 24 hours after Tsingshan Holdings was unable to pay margin for its huge nickel short positions The unprecedented trend of LME has caused the entire industry to fall into chaos, once brought several brokers to the brink of bankruptcy, and caused problems with the future of the LME and its own role. At that time, the LME announced a suspension of trading and took drastic measures to cancel about $3.9 billion in transactions that occurred at a price of $50,000 to more than $100,000 per ton.
Tsingshan Holdings said in a statement released on Monday that when the freeze agreement was reached, banks including JPMorgan Chase and Standard Chartered agreed not to liquidate their positions in Tsingshan during the freeze period, and did not require margin calls for existing positions. In addition, although Tsingshan received bank support, it has not yet sold more than 150,000 tons of nickel short positions. Tsingshan has stated that after the abnormal market conditions ease, it will reduce its existing positions in a fair and orderly manner.
Tsingshan Holdings is also negotiating a loan facility with the same consortium of banks to support its short positions, while it said talks on financing would continue while the agreement is frozen.
Comments