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Nickel’s Chinese tycoon “Big Short” trips Kiyoyama’s miracle growth

Chinese tycoon Xiang Guangda must find a way to rescue his Tsingshan Holding Group from the crisis after betting on nickel prices backfires and raises the volatility of metals essential to the electric vehicle industry.

One of the world’s top nickel producers faces huge losses in short positions after last week’s price surged to over $ 100,000 per ton and the London Metal Exchange stopped nickel trading. ..Read the full text Read the full text

Tsingshan needs to either pay off any outstanding short positions that could amount to US $ 8 billion or prove that he has enough deliverable nickel to pay back in kind.

Beijing may intervene to rescue Qingshan, sources familiar with the matter said ReutersAccording to two analysts, China may replace some of its high-grade nickel reserves with low-grade nickel pig iron (NPI), which Chinshan produces to meet LME quality standards.

Kiyoyama and China’s National Reserve did not respond to requests for comment.

Tsingshan was previously aware of market volatility.

Last year, it triggered price cuts with surprising news that it could solve a major bottleneck in electric vehicles by offering battery material manufacturers nickel mats and increasing battery grade supplies in a cheaper way. ..

Bet prices will go down, Kiyoyama started building short positions last year. The bet backfired, partly because Russia’s invasion of Ukraine sent metal prices. Soaring, Apply pressure to large short position holders, including Kiyoyama.

“The market felt that (Kiyoyama) would start, but they probably did it too. quick… The quarter was too early and no one expected what would happen in Ukraine. “

Kiyoyama suggests that foreign factors may be pushing up nickel prices.

“Foreigners have some behavior and we are actively coordinating. [with related parties]”China Business News quoted Xiang as said on March 8.

Market turnover hasn’t affected Kiyoyama’s Indonesian business, miners familiar with the matter said. Reuters..

For Indonesia, Tsingshan is a way to realize its ambition to become a one-stop shop for EV battery raw materials, and the company executed the project at ultra-high speed. Western companies often complained personally about the access and resources Tsingshan obtained domestically.

“The government has ambitions in Indonesia and wants to build a battery hub for electric vehicles, which is why there are policies to support the industry,” said a source. ). “

Chinshan is also considered the Southeast Asian poster child of President Xi Jinping’s vast infrastructure program, the Belt and Road Initiative of China.

In contrast to the privately held Tsingshan, some high-profile projects led by Chinese state-owned companies have been left behind in concerns about high prices, corruption and debt sustainability.

Market disruptor

Founded in Wenzhou in 1988, Tsingshan began manufacturing stainless steel and automobile windows and doors.

But Xiang, that fate changed at the age of 64, In 2009, we started a survey of the Indonesian market. Over the next decade, low-cost nickel pig irons have rocked the global nickel industry.

We have established a facility in Indonesia, the world’s largest producer of nickel, and boast a production volume ranging from nickel sulfate to nickel mat, an intermediate product that can be used for both stainless steel and batteries.

Tsingshan employs more than 40,000 people and is at the forefront of two major nickel hubs in Indonesia, including the 5,000-hectare Morowari Industrial Estate, with airports, mining plants, ports and executive visitor hotels.

The company’s facility in Sulawesi is equivalent to 850,000 tonnes of nickel this year and aims to produce 1.1 million tonnes by 2023.Read the full text

“There was nothing on the site in 2015 … so they did something absolutely miraculous. It was a masterpiece for them to escape China’s higher power (cost) and move everything to Indonesia. “Durant said.

The industry has acknowledged much of this success to Xiang.

He has become known as a market turmoil that can “dominate the world,” said Stephen Brown, Canberra’s independent nickel consultant.

Mr. Shan said he opposed rising nickel prices and is sticking to being a low-cost producer of nickel and stainless steel.

“I don’t think this crisis will make a big difference in Kiyoyama’s strategy,” he added.

According to market sources, Kiyoyama has reduced its exposure, but it is unlikely that it has fully covered all positions.

The state-owned Chinese newspaper Securities Daily said on March 9 that Tsingshan had deployed “sufficient spot products” for delivery by replacing nickel mats with nickel plates in the domestic market.Read the full text Read the full text

The LME enables the supply of nickel cathodes and briquettes, including plates.

“There aren’t many spot nickel products on the market, and Kiyoyama is unlikely to win 100,000 tonnes,” said an unnamed Cantonese-based analyst. -Reuters

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