Demon nickel reappears? Shanghai prices soared to the limit, and it was rumored that Nickel King only covered some empty orders

Nickel prices in London surged again. On March 24, the price limit soared for the second consecutive trading day (15%), driving Shanghai nickel prices to also soar to the limit on the 25th. According to the market, Xiang Guangda, chairman of Tsingshan Group, known as the “nickel king”, has recently covered some of the empty orders.

Bloomberg reported on the 24th, citing unnamed sources, that Xiang Guangda took advantage of the temporary unblocking of the nickel market this week and bought nickel futures through the London Metal Exchange (LME) to cover short positions. However, Xiang Guangda and his companions only covered tens of thousands of tons of short positions, and their short orders were still huge. According to reports, when the nickel market suspended trading on March 8, Xiang Guangda held more than 150,000 tons of short positions, and his business and trading partners also held a large number of short positions.

Michael Widmer, director of metals research at Bank of America, pointed out that the short order has not yet been covered, and traders will eventually have to close their positions. At least until this batch of short orders is fully covered, nickel prices may fluctuate violently every day.

At the beginning of March, the price of nickel soared by 250% in two trading days because Tsingshan Group was eager to cover the short order, which shocked the market. Beijing Daily once reported that in response to the rumors of being short-squeezed by foreign capital, Tsingshan Group responded on March 9 that it had deployed sufficient cash for delivery. Market rumors pointed out that Tsingshan Group was short-squeezed by foreign investment (reportedly the international mining giant Glencore), and the potential loss of short positions could be as high as US$6 billion to US$12 billion. 60% stake in the mine.

Zero Hedge reported that although the large short positions held by Tsingshan in the LME are eye-catching, there are actually other industrial players and physical traders in the market who hold short-side safe-haven positions. Brokers forced liquidation of positions, which may trigger another wave of short squeezes. The data showed that as of the end of last week, commercial users held 74,166 short positions in nickel.

It is worth noting that the Shanghai Futures Exchange showed that the nickel futures NI2204 had a daily limit in early trading on the 25th, but the daily limit opened during the session.

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