For the industrial metal of nickel, many people must not know much. In fact, it has many applications in today's life field. For example, in stainless steel materials, nickel is contained, and the one-dollar coins we use now also have nickel components. Just this week, nickel became a hot topic of discussion because it went up in price and it was crazy. Nickel prices have soared 248%, and in China, there is a company known as the "world's nickel king", which has not had a good time recently. Some people even described the rise in global nickel prices as pushing the company to death.
Prices soared 248 percent, a record high
Just this Monday, the price of nickel soared from $29,700 a tonne to $55,000, an increase of more than 90 percent. This number has exceeded the all-time high price, but this is far from the end. The next day, nickel prices continued to soar, breaking through the highs continuously, and have exceeded $100,000 / ton, and the increase in two days has reached 248%. This price is really outrageous, so that there are many ridiculous paragraphs on the Internet. A kilogram of 1 yuan is worth a total of 107 yuan, but the price of nickel after melting it exceeds 150 yuan.
The fact that the global nickel price has increased so rapidly is mainly due to concerns about the geopolitical conflict between Russia and Ukraine. Because Russia is one of the major exporters of nickel metal, Western countries continue to sanction it, resulting in the price of nickel also climbing. However, this amplitude is really amazing. Soon after, rumors began in the market that the move was to short the Tsingshan Group from China, and the black hand behind it was a global multinational trading group. Regardless of the truth or falsity of this rumor, the rise in nickel prices is indeed not a good thing for Tsingshan Group.
Many people have not heard of the name Aoyama Group, but its position in the industrial field is very important. For example, the group produces more than 10 million tons of stainless steel per year, accounting for one-fifth of the global market share. In addition, it has extensive involvement in nickel metals, as it is one of the main raw materials for the production of stainless steel. In Indonesia, Tsingshan Group has built a special mining plant and owns a large number of nickel mines. According to statistics, the group's share of the global nickel market is about 18%.
It can be said that Qingshan's voice in the global nickel market is very heavy. In a market economy, supply and demand determine prices. Generally speaking, as long as Tsingshan Group releases words, indicating that the supply of nickel metal is sufficient, the price will soon fall back. Moreover, the group itself also holds a lot of short contracts to avoid risks. If the price of nickel continues to fall, the price of the products it produces will also fall, and the profit will decrease. However, because of the empty contract held in his hand, Aoyama can also earn back the lost money from the financial market.
The world's nickel king, will lose billions of dollars?
By analogy, if the nickel price rises, then the short contract will be adrift, but the profit margin of its products still exists, and Aoyama can also do without loss. No matter how you look at it, it can stand in an invincible position. But this time, I'm afraid Aoyama wasn't so lucky. Because in the market rumors, the group has a large number of short futures orders in its hands, but there is no sufficient supply to supply. As a result, the market has speculated in the price of nickel, and at this time Qingshan has two principles. Either you buy nickel at a high price to complete the transaction, or pay a huge margin to delay the completion of the transaction.
However, no matter which option you choose, it will eventually cost billions of dollars. This number is not a small test for any company. In fact, behind this soaring nickel price, there have been many conspiracy theories. For example, some people say that this is a Western country's suppression of China in order to crack down on our new energy industry chain. Some people say that this is an international group that has set its sights on Qingshan and wants to get a piece of the pie. Not long after, Xiang Guangda, the head of Tsingshan Group, officially stood up and responded.
Xiang Guangda said that in recent times, foreigners have indeed made a lot of moves, but the company is also coordinating with all parties. At the same time, the national level is also very concerned about and supportive of the development of Qingshan. This response has also been interpreted by many as evidence of the game between the great powers. Shortly after Xiang Guangda responded, the London Metal Exchange announced that it would cancel and postpone the nickel trading on The 8th and 9th. This means that the transaction reached on the 8th is voided and the transaction on the 9th is postponed. This news must make Tsingshan Group breathe a sigh of relief.
So the question is, in today's complex international environment, why does Qingshan still hold a large number of nickel trading short orders? Some experts have analyzed that the reason for the sharp rise in global nickel prices is that there are the following factors: low inventories, the impact of the national situation, and long-term funds are forced to short. First of all, when nickel stocks become extremely low, it is to create conditions for price inflation, and global nickel stocks have also dropped from 500,000 tons in 2016 to about 80,000 tons today, which is also the lowest level in history.
Factors of the soaring price of nickel as well as conspiracy theories
Secondly, with the outbreak of war between Russia and Ukraine, Western countries led by the United States have continuously imposed sanctions on Russia, which has also led to a huge impact on nickel metal from the supply side. As mentioned earlier, Russia is one of the world's leading producers of nickel metals. Last year, the country produced nearly 12 percent of the nickel metal produced globally. Although nickel metal is not included in this sanction, short-term exports have still been greatly affected.
Finally, the soaring price of nickel may also be that foreign capital is hunting Tsingshan Group. As one of the major producers of nickel, in order to prevent the company from being damaged by the decline in nickel prices, there are a large number of empty orders in hand, and there must be an intention to avoid risks. However, the Russo-Ukrainian war has affected the export of nickel from Russia, which has allowed foreign capital to see opportunities. Since it is difficult for Tsingshan Group to buy a large amount of nickel, and its own inventory is not high, it will pull the price to a very high level in a short period of time and completely explode its short orders.
Of course, as the "world nickel king", Aoyama is not so simple to collapse. Last year, the company's revenue exceeded 350 billion yuan. According to the market rumors, the statement that Aoyama will lose $8 billion this time is not a pain to Aoyama, but it will definitely have a long-term impact. So, the London Metal Exchange, why is there an emergency suspension of trading? In this regard, experts say that this is necessary and appropriate. Because when there is an abnormal situation in the rise and fall of a certain day, some protective measures should be set up. On the stock market, we can often see circuit breakers and limit limits, so that we can avoid short-term risks.
For both investors and the exchange itself, it is a protection. Soon after, we should soon see the continuous transmission of market risk. In particular, the market volatility is very large, the overall loss will be very large, and the difficulty and impact of post-processing is not small, the crazy rise in nickel prices is a special event, even in the history of international finance for hundreds of years, it is also very rare.
Therefore, after the coordination of all parties, nickel prices should enter a short-term shock downward trend. Especially considering the crazy prices of the last two days, its price will continue to fall in the long run. As for the various conspiracy theories that have gone viral in the market, experts say they don't have to care because this is the usual means of trading in the futures market. Especially in the international futures market, there are many short orders, and once they appear, they will be targeted until the short orders are blown up. Therefore, there is no conspiracy theory, and there is no chess game to play.