According to the announcement of Qingshan group, Qingshan has reached a silent period agreement with a syndicate composed of futures banks. Subsequently, the London Metal Exchange (LME) announced that it would resume trading at 8 a.m. London time on March 16. It is reported that Castle Peak Group has also reached an agreement with two large-scale nickel using enterprises to exchange 4000 tons of pure nickel warehouse receipts with high matte nickel every month for nickel futures delivery. The latest announcement of LME shows that the limit for the rise and fall of nickel trading is set at 5%.



Castle Peak: high matte nickel for nickel beans



According to Shanghai Securities News, Qingshan group has reached an agreement with two large-scale nickel using enterprises (power battery raw material enterprises), which provide Qingshan with a total of 4000 tons of pure nickel warehouse receipts every month for physical delivery of nickel futures.



The basic requirement of LME for delivery products is that the nickel content shall not be less than 99.8%. The nickel content of high matte nickel produced by Qingshan group is about 80%, and the nickel content of ferronickel is about 10% to 20%.



It is understood that castle peak will take the actual content of nickel as the main standard and exchange the self-produced high matte nickel with the nickel bean warehouse receipts of the two enterprises. The background of continuous warehouse receipt exchange is that Castle Peaks high nickel matte production in the Indonesian park will be close to 8000 tons per month. In addition to the two companies that have signed the agreement, Castle Peak does not rule out negotiating with more similar nickel companies to ensure more abundant warehouse receipts for delivery.



LME is about to resume nickel Trading



LME announced the suspension of nickel trading after an epic short squeeze in nickel prices. After a week, the nickel trade will restart soon. On March 14 local time, LME issued an announcement confirming that the LME nickel contract will resume trading at all LME execution sites at 8:00 London time on Wednesday, March 16, 2022.



It is worth noting that LME revised the trading rules and began to limit the price of all metals, including nickel. From March 15, LME implemented daily price limits in two directions for all base metal contracts except nickel. The price limit range is 15% up and down of the closing price of the previous trading day (subject to the three-month contract price of relevant metals, the same below); From March 16, the daily price limit will be implemented for the nickel contract, with the price limit range of 5% up and down of the closing price of the previous trading day, and this standard will continue to be reviewed according to the market conditions.



LME is also strengthening the management of the nickel market and will require all brokers to disclose all positions of more than 600 tons of nickel held by their customers. Trading members are also required to provide LME with additional information and regular reports on the total of exchange and OTC nickel positions. In addition, the delivery time of all nickel contracts signed before March 16 and with a delivery period between March 16 and March 22 (inclusive) will be postponed to March 23.



"It is planned to reassess the rationality of the nickel intraday rise and fall limit at the end of the transaction on March 16, and adjust these limits according to the current market conditions." The London Metal Exchange said.



Reach a silent agreement with the creditors of futures banks



In the early morning of March 15, Qingshan group issued a statement that Qingshan group has reached a silent agreement with a consortium composed of creditors of futures banks. During the quiet period, Castle Peak and the syndicate will actively negotiate and implement the standby and guaranteed liquidity credit, which is mainly used for Castle Peaks nickel position margin and settlement needs. During the silent period, the participating futures banks agreed not to close the positions of Castle Peak, or requested to increase the margin for the existing positions. As an important part of the agreement, Castle Peak Group shall reduce its existing positions in a reasonable and orderly manner with the elimination of abnormal market conditions.



Nickel price is expected to return to rationality



A person close to Qingshan group told the China Securities Journal that the sharp rise in nickel price is indeed a serious deviation from the market, and there is a possibility of decline in nickel price after LME reopens trading. If the nickel price falls, Castle Peak Group will choose the right time to reduce its position. Even if the price of Lun nickel remains high, the nickel products produced by Qingshan group will be sold at a high level, so as to minimize losses.



In his opinion, Castle Peak Group is full of confidence in its position. "With the support of the syndicate, Qingshan group has solved the liquidity crisis and gained more time, which can minimize losses."



Although there is a consistent attitude towards the return of nickel prices to rationality, many industry insiders interviewed by the reporter said that they are unable to make an accurate judgment on the later price. The trend of the conflict between Russia and Ukraine and whether Russia and Ukraine can restore the supply of nickel are the key factors. As a base metal raw material, the sharp rise and fall of nickel price will have a great negative impact on the industrial chain. It is very important to restore the market order and return the price to rationality as soon as possible.



Shenwan futures said: "In the short term, we believe that the nickel price probability will continue to fluctuate. From the Qingshan announcement and the latest announcement of LME on resumption, the price may fluctuate violently after the opening of LME, and it is a more rational choice for domestic investors to leave in advance. In the medium and long term, at present, the consumption prospect has slowed down significantly, the global nickel supply continues to grow, and the overseas nickel price may face a large downward trend after the settlement of the warehouse contradiction Risk. "



Jinyuan futures believes that in the short term, the nickel price will continue to play the game around position delivery and short selling, and the price will continue to fluctuate sharply. It will take time to observe how the downstream spot market prices and when the market returns to rationality. Therefore, maintain the wait-and-see until the market returns to rationality.



Gu Fengda, director of Guoxin futures research and consulting department, said that since the development of lunni storm, the liquidity of domestic nickel futures and spot market has recovered much earlier than that of lunni. Domestic nickel and stainless steel industry chain see that Chinas futures market has strong supervision and pricing can better reflect the fundamentals of domestic supply and demand than overseas futures. Therefore, the impact of lunni subsequent storm on Shanghai nickel will be indirect and controllable, The inner market will be more resilient than overseas.