The actual controller of Qingshan holdings is Xiang Guangda, a businessman from Wenzhou. On the 2021 Hurun global rich list, Xiang Guangda is firmly in the position of the richest man in Wenzhou with an asset of 21.5 billion yuan. It is also regarded by the outside world as one of the most mysterious and low-key rich in Zhejiang.

Castle Peak Holdings has not been listed yet. It is free from the capital market and has the style of family business. "In addition to the founder Xiang Guangda, Xiang Guangtong, Xiang Guangdas younger brother, and Xiang Bingxue, Xiang binghe, Xiang Bingqing and Xiang Haiyan, members of the Xiang family, are all distributed in the major plates of the Qingshan system," a Zhejiang businessman researcher told the financial associated press

According to the public resume, Xiang Guangda started his business in 1988 and established Zhejiang Fengye group in 1992. This enterprise is the prototype of Qingshan holdings. In 2020, Qingshan holdings produced 10.8 million tons of stainless steel crude steel in the whole year, realizing a sales revenue of 290.8 billion yuan. In 2021, it ranked 279th among the worlds top 500 enterprises.

Indonesia has the largest nickel reserves in the world. As the worlds largest nickel producer, Indonesia has long been a battleground for global mining giants. At present, the local nickel industry is divided into three parts: Indonesian local enterprises, western mining enterprises and Chinese enterprises. Indonesian local enterprises are represented by state-owned antam and private harita group, while western mining is represented by Brazilian mining giant vale (NYSE: value).

The representative of Chinese enterprises is Qingshan holdings. At present, Qingshan has built a complete industrial chain of "raw ore ferronickel stainless steel". In 2009, Castle Peak holdings invested in Indonesia for the first time to develop laterite nickel ore, followed by overseas production bases in India, the United States, Zimbabwe and so on. In 2017, Qingshan holdings entered the new energy industry, established Ruipu energy, and ranked among the top five lithium battery installed capacity in China in only three years. According to Wenzhou Daily, in June 2019, Xiang Guangda, chairman of the board of directors of Qingshan industry, said publicly that by 2018, Qingshan morowali Industrial Park had completed an investment of US $8 billion.

On December 9, 2021, Aoyama holdings announced that its large-scale battery high nickel matte project in Indonesia was put into operation. According to the plan, the project will provide 60000 tons and 40000 tons of high nickel matte to domestic mining enterprise Huayou cobalt industry (101.250, - 11.25, - 10.00%) (603799. SH) and cathode material manufacturer Zhongwei Co., Ltd. (110.750, - 5.45, - 4.69%) (300919. SZ) within one year.

The project is located in Indonesias Castle Peak Industrial Park, which is located in morowali County, central Sulawesi province. The surrounding population is less than 10000. The town is close to the deep sea. Previously, the infrastructure was relatively backward. After years of development, the park now has large-scale wharf, coal-fired power plant, airport and other infrastructure.

Nickel is a silvery white metal, which is widely used in the production of stainless steel because of its good ductility, high temperature resistance and difficult oxidation in the air. With the development of new energy vehicle industry, nickel ushers in a new demand growth point, that is, it is used to manufacture ternary lithium batteries. Due to the small reserves of nickel sulfide ore that can be used to manufacture batteries in the world, the industry began to study the conversion of laterite nickel ore used to produce stainless steel into nickel for batteries in 2018. The development of high matte nickel is one of the technical paths.

The global sales of new energy vehicles continued to grow, pushing up the demand for power batteries. There was a mismatch between supply and demand of upstream raw materials, and the prices of metals including nickel and lithium soared. Chinese enterprises began to join the Indonesian investment army. In October 2018, Huayou cobalt (603799. SH) announced the establishment of a joint venture to build a battery nickel project in Qingshan Industrial Park. Luoyang molybdenum (5.460, - 0.27, - 4.71%) (603993. SH) then participated in the project in 2019. In 2021, Guangdong Bangpu, a subsidiary of Ningde era (455.450, 0.56, 0.12%) (300750. SZ), Yiwei lithium energy (71.370, - 3.42, - 4.57%) (300014. SZ), ternary precursor manufacturer greenmei (9.500, 0.40, 4.40%) (002340. SZ) and Zhongwei announced the establishment of a plant or additional investment in Qingshan Industrial Park for the development of nickel for batteries, with a cumulative investment of more than US $3 billion.

In meeting the demand of battery manufacturing, the supply of nickel is actually a structural shortage. Nickel ores in the world are divided into nickel sulfide ore and laterite nickel ore. nickel sulfide ore can produce high nickel matte through smelting, and then processed into nickel sulfate that can be used to make batteries, that is, nickel for batteries. However, the reserves of nickel sulfide ore are small, accounting for only 28% of the global nickel resource reserves, and after years of mining, the reserves have decreased and the mining difficulty has increased. The remaining 72% of laterite nickel ore in the world cannot be directly processed into nickel for battery, which is mainly used to produce stainless steel. Laterite nickel ore is also the main nickel resource in Indonesia.

With the growth of power battery demand, the demand for nickel for battery has increased greatly, which has forced the development of technology. The industry has begun to study the path of developing nickel sulfate from laterite nickel ore since 2018. By opening up the technical route, we can solve one of the three major barriers for Chinese investment in Indonesia.

Anson securities once analyzed that there are three difficulties in the construction of battery nickel project in Indonesia, namely technology, capital expenditure cycle and mineral right approval. Cooperation with Castle Peak Group can solve the problem of long cycle.

It is worth noting that this round of Chinese enterprises going to Indonesia basically have no mineral property rights locally, and some enterprises choose to sign supply agreements with Castle Peak holdings to solve the supply problem.

The cooperation with these battery material suppliers is in line with the goal of Qingshan holdings to enter the new energy industry. In early September 2021, Li Jing, vice president of Qingshan holdings, said that while the stainless steel business was developing steadily, the company turned its focus to the new energy industry and sought to establish a lithium battery industry chain. Li Jing said at that time that in the lithium battery industry, Qingshan holdings hoped to integrate vertically and horizontally. Vertical integration refers to the development from both ends of the industrial chain to the middle. At one end, Qingshan Holdings has nickel mines in Indonesia; At the other end is Ruipu energy, a battery manufacturer established by Qingshan holding group in 2017. Now, both upstream and downstream are working in the middle, mainly to solve the supply chain problem of Qingshan holdings.

The way of horizontal expansion is that Qingshan holdings cooperates with leading enterprises in China to develop the new energy industry chain. For example, Li Jing said, "assuming that a lithium salt plant is built in Indonesia and there are self owned power plants and coking plants in Qingshan Industrial Park, the two most critical elements of operating a lithium salt plant - natural gas and electricity can be solved at a low cost; at the same time, Indonesia is close to Australia, a major lithium producer, which can save freight."

At present, Castle Peak Holdings has gradually improved its lithium battery industry chain in Indonesia. In September 2021, Chinese lithium salt manufacturer Shengxin lithium energy (49.750, - 4.45, - 8.21%) (002240. SZ) announced the establishment of a lithium salt project with an annual output of 60000 tons in Qingshan Industrial Park, Indonesia, with a total investment of US $350 million, which will become the first lithium salt plant in Indonesia.

Potential position explosion crisis

"Nickel minority, small number and few players are more vulnerable to the influence of a single player." A person from Zheshang futures told the financial associated press.

On December 9, 2021, Castle Peak holdings announced that its high nickel matte project in Indonesia was put into operation. Affected by COVID-19, the project was put into operation about two months later than Castle Peak holdings. Previously, in March 2021, when Qingshan holdings announced the project, it triggered a strong shock in the market, which caused the market oversupply expectation, and the domestic and foreign nickel futures markets fluctuated violently. Lun nickel fell 14% in two days at that time.

According to the plan, Castle Peak holdings will continue to increase its investment in Indonesias nickel industry. From 2022 to 2023, nickel production is expected to further rise to 850000 tons and 1.1 million tons. To some extent, the production plan of Qingshan Holdings has exceeded the market expectation. If its Indonesian project is carried out as planned, the Indonesian nickel equivalent will meet the demand of Chinas primary nickel in 2022, and the living space of domestic nickel pig iron enterprises will be narrower.

On the other hand, the market had previously expected that with the increase of nickel production of Qingshan holding Indonesia project, the rising momentum of nickel price would subside, especially after Qingshan holding Indonesia high matte nickel project was put into operation at the end of 2021, the markets concern about nickel supply shortage caused by the rise of new energy industry would be alleviated.



However, under the conflict between Russia and Ukraine, the market is worried that the limited export of Russian nickel will affect the global nickel supply, resulting in the decline in the number of LME nickel deliveries, which is the primary factor contributing to the recent strength of nickel price.

Norilsk of Russia is the worlds largest nickel producer, accounting for 7.23% of the global nickel supply in 2021. However, from the perspective of electrolytic nickel, the delivery product in the futures market, Norilsk Nickel has a larger share in the global market. According to the statistics of Tianfeng futures, in 2021, the company produced 165000 tons of electrolytic nickel in Russia and Finland, accounting for about 15% of the global output.

Since March 1, the nickel price has soared sharply every day since the closing price of US $24225 / ton on the previous trading day. Today, it has exceeded US $101365 / ton in six trading days and soared 3.18 times in six trading days. This means that short sellers will face huge financial pressure no matter which way they choose to deal with it.

At present, the position inventory ratio of lunni has been obviously unbalanced, which means that the position pressing situation has been formed. The inventory of futures exchange is currently at an all-time low, supporting the upward trend of nickel price. Data show that on March 7, LME nickel inventory was only 76800 tons, a year-on-year decrease of about 70%, close to the new low of two years. The position of Lun nickel is 196300 hands, with one hand corresponding to 6 tons, i.e. 1177800 tons of nickel.

The high matte produced by Qingshan group is not a LME nickel delivery variety, which means that if Qingshan group is indeed a short position holder, it is unlikely to choose delivery, because high matte is a raw material for the production of electrolytic nickel, and the transformation path is economical only if the high matte price is lower than the electrolytic nickel price.

According to the analysis of senior people in the above industry, "Futures prices soar, and short positions are in urgent need of additional margin. When entering the delivery month, you can choose to deliver or extend the contract, which requires a lot of cash flow investment. If the required supplementary funds are too much to be added, it will be forced to close the position by the exchange and bear huge losses. If the short position of 200000 tons of Qingshan is calculated, if the price is maintained at 80000 US dollars, Qingshan holdings will Spend $16 billion. The short selling cost of Castle Peak is $20000 per ton, and it may lose $12 billion if it closes its position. "