The financial sector reported on March 8 that something big had happened in the nickel market, and the long and short war became the focus of attention.

Unprecedented air pressure



At the opening of this morning, Shanghai nickel (228810, 29840.00, 15.00%) closed the daily limit at the opening, up 15.00%. Now it is reported as 228810 yuan / ton. At the same time, the nickel price of LME expanded to 100% within the day, breaking the $60000, $70000, $80000, $90000 and $100000 mark in a row, with a sharp increase of 248% in the two trading days, setting a new record.

Last night and this morning, Lun nickel once soared 78%, up to US $55000 / ton, the largest trading day increase in history. As of the close of this morning, Lun nickel closed up 76% to US $50905 / ton, the highest since June 2007. Affected by lunni, Shanghai nickel continued to rise the daily limit after the daily limit, up 15% to close at 228810 yuan / ton.



According to market rumors, a commodity trader in Glencore Xstrata, Switzerland, forced a position on nickel, a private enterprise in China. According to the London Metal Exchange, an unidentified nickel inventory holder holds at least half of the inventory of the London Metal Exchange (as of February 9). It is understood that LME nickel inventory fell by 3006 tons to 77082 tons last week.



It is said that the private enterprise is Qingshan holding group. Statistics show that Qingshan holding group, headquartered in Wenzhou, Zhejiang Province, is the largest private iron and steel enterprise in China, the worlds largest stainless steel manufacturer and the worlds nickel king. According to statistics, the annual nickel output of the mine won by Qingshan holdings is 300000 tons, almost half of Chinas annual nickel output, accounting for 12% of the global annual nickel equivalent. The production capacity ranks first among the global mining enterprises, making Qingshan holdings not only the worlds largest producer of stainless steel, but also the worlds first enterprise in nickel production capacity. Qingshan holding group is one of the worlds top 500 enterprises, ranking 279.



Glencore, a commodity giant, is the largest enterprise in Switzerland, with an operating revenue of US $215.11 billion. Founded in 1974, Glencore is a leading commodity producer and operator in the world. Its business scope covers the supply of mineral products, energy products and agricultural products (5.75-4.64%, diagnostic shares). On February 15, Glencore announced that it had sold its shares in russneft and withdrew from this 20-year investment. In this regard, Glencore did not disclose the reasons for the sale of Rosneft shares, nor did it disclose the identity of the buyer or the transaction price.



According to market news, in this unprecedented duel, Canon is a bull and Castle Peak Group is a bear. From last nights market, many hair started the position pressing offensive and short defense. With the expansion of the increase, short losses soared, passive position closing and accelerating the upward trend of the market.



Some nickel traders said that the surge in nickel prices was due to the forced closure of customers short positions. The risk of supply interruption in Russia continued to ferment, and the demand for large margin had a great impact on the hedging positions of customers in the industrial field, which had to be leveled under the market condition of increasingly poor liquidity.



Long term short "nickel king"



It is said that the short hedged single warehouse in this event reached 200000 tons. It is worth noting that the total nickel inventory of the exchange and LME in the previous period was less than 100000 tons.



As early as October 15, 2019, nickel prices plummeted by $825 in less than five minutes. According to foreign media at that time, due to the sharp decline in inventory. Nickel inventory has dropped by 90000 tons since mid to late 2019. This round of inventory decline, from the previous increase in discount from negative to positive, shows the markets judgment and change process of the tension between supply and demand in the real goods market.



At that time, it was reported that Qingshan holding group cooperated with financing banks such as JPMorgan Chase to remove nickel from LME warehouse. It was estimated that 30000 to 80000 tons of nickel had been purchased. In addition, it is also reported that Qingshan holding group has purchased nickel ore in advance before the mining ban in Indonesia, and also purchased a large amount of nickel metal from the exchange to ensure its supply. Therefore, Qingshan holding group is one of the driving forces leading to abnormal changes in LME inventory.



The short position in 2022 is that the company began to establish short positions last year, in part because it wanted to hedge the growth of production and believed that the rising momentum of nickel price would subside. The production cost of Castle Peak in Indonesia is less than US $10000 per ton, while the benchmark price of LME is more than US $23000.



However, some insiders questioned that as a production-oriented enterprise with real economy, unlike investors and traders in the futures market, Qingshan holdings does need a large amount of nickel for the production of stainless steel. Whether the motive of a large number of transactions of Qingshan group is speculative behavior or strategic reserve inventory remains to be discussed.



According to the associated press, the relevant information of Qingshan Holding Co., Ltd. will be published in the morning of August 8. According to the news that Qingshan Holding Co., Ltd. and LME will not respond to the news that Qingshan Holding Co., Ltd. will hold a public meeting on the price rise of nickel, the relevant information of Qingshan Holding Co., Ltd. will not be confirmed in the afternoon



It is not advisable to guess the top hastily under high risk



Due to the intensification of market fluctuations, the last stock exchange issued a document yesterday (March 7) evening to remind all parties in the market to do a good job in risk control. The previous period said that recently, the market volatility has intensified. Please do a good job in risk prevention, rational investment and maintain the stable operation of the market.



Citigroup analyst Max Layton believes that the price risk of the whole metal market will be upward in the next month. He believes that there is a shortage of metals produced in Russia and Ukraine. The United States and European allies explored the idea of banning the import of Russian oil, which also made the metal market nervous and promoted the overall rise of the market.



According to the analysis of Jinyuan futures, the direct reason for the rise of nickel price lies in the escalation of the conflict between Russia and Ukraine. The market is worried that the supply of nickel in Russia will be limited, superimposed on the current declining inventory of Lun nickel, so there is a market trend of short pressure.



Huatai futures analysis said that at present, nickel is still in the pattern of low inventory, strong reality and weak expectation. The global refined nickel inventory is still declining and at a low level, with strong actual supply and demand. The state of low inventory and low warehouse receipt improves the elasticity of nickel price rise. The supply and demand expectation of nickel midline is not optimistic, but there are also variables in the midline expectation. Nickel prices are still treated in a partial way until there is an obvious inflection point in inventory and the actual supply and demand turns into surplus. Recently, lunni has been greatly strengthened due to the influence of capital game and position squeeze, and the price has been far from the scope of supply and demand. Before the end of capital game, it may still maintain a strong trend. However, the current price has been seriously divorced from supply and demand, and the downstream has suffered a large loss, so the nickel price also needs to be treated with caution.



Everbright futures believes that although the geographical dispute between Russia and Ukraine is the driving factor, overseas malicious position squeeze is the main driver. The short-term nickel price performance has been far away from the fundamentals. The lower and lower reaches of the nickel price will be impacted to varying degrees, and the wait-and-see mood may be stronger. It is recommended to wait and see in the short term and wait for the end of the risk event.



In addition, several institutions said in the research report that the current nickel price market has begun to break away from the scope of fundamentals and enter the market game for inventory and warehouse delivery. The market trend is more uncertain and it is not suitable to guess the top rashly.



The relevant person of Shanghai Futures Exchange responded to the media on the afternoon of the 8th, saying: "recently, the previous period was concerned about the intensification of market volatility. From February 23 to March 7, the exchange has issued three market risk warning notices and a series of risk control measures. The exchange reminded relevant units to do a good job in risk prevention, make rational investment and maintain the smooth operation of the market."



In addition, Wuxi Stainless Steel Electronic Trading Center Co., Ltd. also issued a notice on the suspension of nickel trading today, saying that the trading of all bill of lading sales agreements of nickel varieties will be suspended from March 8, 2022, and the resumption time will be notified separately; Since the settlement on Tuesday, March 8, 2022, the deposit of all bill of lading sales agreements of nickel varieties will be adjusted to 20%. Before that, all dealers holding the bill of lading sales agreements of nickel varieties will be limited to the deposit.