How China’s ‘Big Shot’ tycoon broke the nickel market and survived a US$1 billion loss
- Xiang Guangda survived the epic nickel squeeze, thanks in no small part to the LME’s decision to intervene and cancel trades
- The tycoon behind Tsingshan took a US$1 billion hit from the crisis, a ‘manageable sum’ given profits generated by his mining empire
By 2.08pm Shanghai time on March 8, it was clear that Xiang Guangda’s giant bet on a fall in nickel prices was going spectacularly wrong.
Futures had just skyrocketed above US$100,000a ton and his trade was more than US$10 billion underwater. It was threatening not only to bankrupt Xiang’s company Tsingshan Holding Group, but to trigger a Lehman Brothers-like shock through the entire metals industry and possibly topple the London Metal Exchange itself.
But Xiang was calm. Within hours, more than 50 bankers had arrived at his office wanting to hear how he planned to respond to the crisis. He told them simply: “I’m confident that we will overcome this.”
And he did.
Four months on, the nickel price is falling, as Xiang had predicted. The coterie of banks led by JPMorgan Chase that were baying for his blood has been repaid. He has closed out nearly all his short position in nickel, making a loss on the trade of about US$1 billion, a manageable sum given the profits being generated elsewhere in his business empire, say people who know him.
Crucially, the man nicknamed ‘Big Shot’ in Chinese commodities circles is poised to walk away from the fiasco with his multibillion-dollar mining and steelmaking company intact and even expanding.