LME nickel mayhem: London to resume trading after Chinese ‘Big Shot’ Tsingshan lines up bank credit to forestall market chaos over its short positions

Trading will resume at 8am London time on Wednesday, as a major client had gained the support of banks that might mitigate further “disorderly conditions,” the LME said

That major client is Tsingshan Holding Group, which reached a so-called standstill agreement with banks for “a standby secured liquidity facility”

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Traders, brokers and clerks on the trading floor of the open outcry pit at the London Metal Exchange (LME) on Monday, Feb. 28, 2022. Photo: Bloomberg

Published: 7:52pm, 15 Mar 2022Updated: 8:44pm, 15 Mar 2022

The London Metal Exchange (LME) will resume trading nickel on Wednesday after its controversial weeklong halt, confident that funding lined up by the largest short-seller of the metal can avert the catastrophic price surge that threw the bourse into chaos.

Transactions will resume at 8am London time on Wednesday, as a major market client had gained the support of banks that might mitigate further “disorderly conditions,” said the LME, a unit of Hong Kong Exchanges and Clearing Limited (HKEX) since 2012.

That major client is Tsingshan Holding Group, the world’s largest nickel producer and a major short-seller of the metal, facing losses estimated by Bloomberg at US$3 billion.

Based in the Zhejiang provincial city of Wenzhou, Tsingshan said it reached a so-called standstill agreement with a consortium of unidentified banks for “a standby secured liquidity facility” – secured loans that a borrower can use in part or in full when needed – for a period to tie it over while it sorts out its margin and settlement obligations on the LME, the metal producer said.

A piece of refined nickel. Photo: Shutterstock

“As an integral feature of the agreement, there is provision for the existing hedge positions to be reduced by Tsingshan in a fair and orderly manner as abnormal market conditions subside,” the company said in a statement on its official Weibo account, without disclosing the duration of its standstill period.