12/21/2023 0 Comments Vw squeezeThe position is spread over nine years of forward contracts as a hedge against raw-material costs - nickel is a key ingredient in electric-vehicle batteries. Volkswagen AG has one of the largest long positions in the market, at the equivalent of over 100,000 tons, according to a person familiar with the matter. But several market participants held sizable long positions that contributed to the rally. While Xiang stands out as the big short, there’s no single trader or investor on the other end that gets the credit (or blame) for driving prices higher. And Tsingshan sold its nickel products in a way that meant traders and buyers would have their own large short positions on the LME, magnifying the pain across the market when prices spiked. This time, Xiang also had company - Bloomberg has reported that several other Chinese firms amassed short positions as his allies. The LME opened a review into trading activity, but took no further action. In 2019, it was on the other side of a short squeeze: it withdrew large amounts of nickel inventories from LME warehouses, causing prices to leap more than 50% in a few months. But Xiang’s position was unusually large, equivalent at its peak to roughly one in eight of all the contracts outstanding in the LME nickel contract.Īnd Tsingshan has a history of aggressive trading. There’s nothing unusual or inappropriate about miners using derivatives contracts to lock in the price of their future production. ![]() Read: Who Is the ‘Big Shot’ Behind Nickel’s Bad Short?: QuickTake When nickel rose rapidly after Russia’s invasion of Ukraine, Tsingshan struggled to pay its margin calls, setting the stage for a short squeeze. The tycoon known as “Big Shot” in Chinese commodity circles had built a giant short position in LME nickel in a bet that increasing supply from his company would drive down prices. is the world’s biggest nickel and stainless steel company. In the meantime, here’s a rundown of the key players in the great nickel short squeeze.Īt the center of the crisis is entrepreneur Xiang Guangda, whose Tsingshan Holding Group Co. Getting to the bottom of who did what, when, and why, could take months or years. Read: The 18 Minutes of Trading Chaos That Broke the Nickel Market It’s far from clear that any party broke any rules - it may be that the rules just weren’t fit for purpose. A market that many veterans simply describe as “broken.” It’s been three weeks since nickel was suspended on the London Metal Exchange after a 250% price spike and while trading has resumed, the market remains all but paralyzed.Īs the crisis plays out, accusations are already beginning to fly. Investors are preparing lawsuits the LME and its regulator, the Financial Conduct Authority, are likely to run investigations. The waiting period for the Taigun small SUV is two months and the backlog is as much as six months for some higher variants, he said.(Bloomberg) - Furious investors and traders. The supply squeeze has resulted in higher wait times for VW’s cars. ![]() The supply chain constraints and semiconductor shortage will continue for the next six months at least, he said. It’s offering new variants in cars to counter the shortage of infotainment and display systems, he said. VW is making an effort to increase the capacity of existing suppliers and form alternate supply chains. Russia and Ukraine are major sources of metals such as nickel, which is used to make high-strength steel for automobiles, he said. The automaker will raise prices of vehicles further as it does not have the capacity to absorb surging input costs that have increased 10-12 percent on an average this year, he said.įor many automakers, including VW, Ukraine was a provider of specific components, whose supply has been hit because of the war, Gupta said. Rising commodity prices have had a significant impact on VW’s margins despite two price hikes to offset inflation, Gupta said. Kia is bringing its first electric car to the country later this year, while Hyundai has vowed to roll out six battery models by 2028 and launch its first electric crossover SUV, the Ioniq 5, this year. Toyota has agreed to consider adapting its hydrogen-powered fuel cell car, the Mirai, for local road and weather conditions. VW’s EV will be up against Honda’s first hybrid electric sedan in India, priced at 1.95 million rupees, or about $25,000. India, the world’s fourth-largest automobile market, is seeing a spurt of interest from global automakers in the race for green mobility. At that time, the automaker will consider making its own batteries - the costliest component of an EV - locally in India, he said. ![]() VW is expecting to start local assembly of its electric cars in India around 2025 or 2027, Gupta said.
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