Spread between Shanghai gold price and London hit a record $121/oz. last Thursday. It had narrowed to $76 on Monday after PBOC People's Bank of China relaxed curbs on imports last week.
So far this year, China has imported
Showing posts with label LME. Show all posts
Showing posts with label LME. Show all posts
September 18, 2023
June 21, 2023
What Really Happened the Night the #Nickel Market Broke
Hundreds of pages of legal filings describe how the LME sleepwalked into a crisis, "that the LME was largely in the dark about Tsingshan's role as the major driver of the price spike until after it had decided to cancel billions of dollars of nickel trades; that the exchange's top decision makers were asleep as the market spiraled out of control; and that Chamberlain made the key decision that the market was disorderly in about 20 minutes after he woke up on March 8 – unaware until much later that the LME's staff had allowed prices to move more rapidly by disabling its own automatic volatility controls."
…
Jane Street alleges the very fact that the LME's key decision makers were asleep was a breach of the exchange's regulatory duties, since it meant that "no-one had been monitoring transactions in order to assess whether there were disorderly trading conditions." The LME disputes that it was in breach.
What oversight there was came from the exchange's trading operations team. They were in charge of operating the LME's price bands, a form of speed bump designed to limit extreme price moves, such as in the case of "fat finger" trades.
But in the early hours of March 8, the operations team received numerous complaints from market participants that the price bands were preventing them from booking trades. At 4:49 a.m., they suspended them altogether.
Dizzying Ascent
It was soon after this that nickel prices started the most dizzying part of their ascent. By the time Chamberlain woke up, at 5:30 a.m., the price was already $60,000 a ton. In the next 38 minutes, it rose another $40,000.
"The abandonment of price bands caused or at least materially contributed to the speed and scale of the increase in prices," Jane Street said in its court filing. "Without price bands in place, the LME could not control price volatility at all."
Chamberlain wasn't aware that his operations team had suspended the price bands, as he made his pivotal decision to suspend the nickel market.
The exchange still didn't have a handle on the scale or the importance of Tsingshan's position — the real reason behind the runaway rally.
…
Brokers on the LME would normally need to pay their first margin call of the day by 9 a.m., based on prices prevailing at around 7 a.m. If that had happened on March 8, the LME would have needed to request $19.75 billion from 28 banks and brokers – an unprecedented sum that was more than 10 times the previous daily record before March 2022.
See the whole article on Bloomberg here:
March 31, 2022
The Motley Crew Behind #Nickel’s Big Squeeze
Tags:
Glencore,
JPMorgan Chase,
LME,
Nickel,
VW
Three weeks after nickel's 250% price spike at the LME, the market remains paralyzed.
March 15, 2022
#Nickel Market #Telenovela
Last week was a tumultuous market in the Nickel market, to say the least Some unprecedented moves were seen not only in terms of price- $100'000/Ton before trading was halted-, but in terms of actions-- LME saving the banks and Brokers by canceling all trades.
Here is a recap of the week's events:
Everyone wants to know what this week will bring. Trading is set to resume tomorrow wednesday march 16:
-- Trading in LME Nickel Contracts will resume at 08:00 London time on Wednesday 16 March 2022 (“Resumption Date”) on all LME Execution Venues;
-- 15% daily upper and lower price limits to all outright Contracts in all Base Metals on all Execution Venues;
-- deferral of delivery to Wednesday 23 March at level for all Nickel Contracts entered into prior to Wednesday 16 March and due for delivery between Wednesday 16 and Tuesday 22 March inclusive;
See the complete notice here: https://www.lme.com/api/sitecore/MemberNoticesSearchApi/Download?id=c71fdcfc-0340-4a05-9f9d-371361f1c9e9
Here is a recap of the week's events:
March 11, 2022
Chinese Nickel Giant Tsingshan Faces $8 Billion Trading Loss as Ukraine War Upends Market
Tsingsham paper loss stood at $8 billion on Monday before the LME suspended trading in Nickel.
Tsingshan's founder, Xiang Guangda, told Chinese media outlet that "relevant government departments and leaders are all very supportive of Tsingshan. Tsingshan is a solid Chinese enterprise and our positions and operations do not have problems."
March 10, 2022
How Chinese #Nickel tycoon Xiang Guangda and his #Tsingshan Holding Group Co. got short squeezed
Bloomberg's Matt Levine breaks down the LME Nickel story and how Chinese nickel tycoon Xiang Guangda and his Tsingshan Holding Group Co. got short squeezed:
Nickel
We talked on Tuesday about a hedging problem for nickel producers. If you make nickel and the price of nickel goes up, you will make more money, one day at a time, as you sell your now-more-valuable nickel. Meanwhile if you have hedged your nickel production by selling nickel futures on a commodities exchange, and the price of nickel goes up, you will get a margin call from your broker demanding that you put up a lot more money right now. Your stock of nickel in the ground and in warehouses has become more valuable, but it is not easy to turn that all into ready money; your short position in nickel futures has moved against you, and that does require ready money. In the worst case, you run out of money and lose your business even as it is becoming more valuable.
There is a variation on this problem.
March 9, 2022
#Nickel Chaos Recalls #LME's Darkest Days
"Shambolic, shameful, scandalous, calamitous, ruinous or pick any word of your choosing. Today has been a shattering blow to all that love the LME and all those that use it to conduct their daily business."— Michael Marlowe, director at Hythe Bay Metals Ltd.
Incredible that the LME canceled all the trades done on Nickel yesterday to save some "market participants" !! $JPM #CCB
LME Chief Executive Officer Matt Chamberlain defended the decision, saying that some brokers would have struggled if the nickel trades had stood. [!!!]
"It would have been extremely difficult for some of our market participants to continue their activities," Chamberlain said in an interview with Bloomberg TV. "The ability of the financial system to get that money to the members in London and then into the exchange I think would have been significantly stressed."
"It would have been extremely difficult for some of our market participants to continue their activities," Chamberlain said in an interview with Bloomberg TV. "The ability of the financial system to get that money to the members in London and then into the exchange I think would have been significantly stressed."
Read the whole story on Bloomberg here:
___________________
https://www.bloomberg.com/news/articles/2022-03-08/metal-traders-reel-as-nickel-chaos-recalls-market-s-darkest-daysNovember 20, 2020
#Zinc @LME hits 18-month high of $2,793/t Friday-outperforming high-flying Dr. #Copper-on supply squeeze, even as stealth stocks build
Tags:
Base Metals,
China,
LME,
zinc
Shanghai zinc trades like a steel derivative -
Zinc soars on supply squeeze even as stealth stocks build
(The opinions expressed here are those of the author, a columnist for Reuters)
LONDON (Reuters) - Zinc has emerged as the unlikely star performer in the London Metal Exchange (LME) base metals suite.
LME three-month zinc CMZN3 hit a fresh 18-month high of $2,793 per tonne on Friday and is even outperforming high-flying copper.
The trigger for the latest leap higher was news that the Gamsberg mine in South Africa is shuttered until further notice while a search continues for two miners missing after an accident.
This is another unexpected hit to a raw materials supply chain already wrecked by COVID-19 mine lockdowns.
Demand, meanwhile, is running strong in China, where zinc has been sucked into steel's bull orbit.
April 17, 2020
Dislocation of #Gold Markets Continues
Tags:
comex,
GLD,
Gold,
LME,
London,
South Africa,
Switzerland,
trading,
UK
The disconnect has remained wide as some of the world's largest banks, which are also the top gold dealers, have grown wary. Even though there is now plenty of time to get metal to New York for June delivery, the wild moves of recent weeks, and the potential for coronavirus-induced logistical headaches, have increased the perceived riskiness of trading the two markets.
"I would guess that the risk managers are not allowing these big positions to be run," said John Reade, chief market strategist at the World Gold Council. "It's moved from a concern about availability and transferability of metal to one of risk appetite."
July 28, 2015
Even the #LME is doing its part to bail out #China @WSJ
Tags:
China,
Commodities,
Gold,
LME,
Yuan
China’s Yuan Pushes Deeper Into Global Financial System
ENLARGE
By
Chiara Albanese
The latest step: the London Metal Exchange, the world’s largest venue for trading metals where $15 trillion of metals was traded last year, is set to accept yuan as collateral for banks and brokers that trade on its platform. The Chinese currency joins the U.S. dollar, the euro, the British pound and Japan’s yen, which are all currently permissible as collateral on the LME’s platform.
“In the commodities area, it makes absolute sense to start providing renminbi-denominated services,” said Trevor Spanner, chief executive of the LME’s clearing house business. “The renminbi is on its way to becoming one of the world’s most widely used currencies” he said.
While largely a technical change, the LME move marks another milestone for China’s currency.
The yuan is now the fifth most used currency for international payments, ranking number seven a year ago, according to data from the Society for Worldwide Interbank Financial Telecommunication, a provider of payments services.
A Bank of England survey on Monday showed that trading in yuan rose 25% in London in the six months to April this year, even as trading volumes in other currencies fell by 8% on average over the same period.
Meanwhile, China, whose economy is a major driver of demand for a range of commodities, is also taking a greater role in metals markets specifically.
Last year, Hong Kong Exchanges and Clearing Limited, which owns the LME, launched yuan-denominated futures contracts for some industrial metals, while the LME signed agreements with two Chinese companies to explore ways of expanding use of the yuan.
In June this year, the London Bullion Market Association said that Bank of China Ltd. will become the first Chinese bank to participate in the daily process for setting the price of gold. China vies with India as the world’s largest consumer of gold, according to the World Gold Council.
The yuan’s gains in the global financial system come as investors turn cautious on China’s domestic markets, where stocks have been on a volatile ride of late. And international use of China’s currency remains tiny compared with the dollar, the euro and sterling.
David Clark, chairman of the U.K.-based Wholesale Markets Brokers Association, said global renminbi trading infrastructure is falling into place, but volumes will only really take off when China’s currency can be freely converted into dollars, euros or other foreign currencies.
“The renminbi is getting more and more important for global finance. But there is a big question mark: when it will be fully convertible?” he said.
Still, a number of major financial centers are racing to become a hub for the yuan, including London.
“The role of the renminbi in foreign exchange trading and cross-border payments has surged,” said Dan Marcus, CEO of London-based currency trading platform ParFX. The rise of China’s currency on global markets “is arguably the most significant development in currency trading since the introduction of the euro in 1999. Ten years from now, it will be challenging the top major currencies.”
Write to Chiara Albanese at chiara.albanese@wsj.com
Read the whole article online here: China’s Yuan Pushes Deeper Into Global Financial System - WSJ
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