Securities Times reporter Mei Shuang
Nickel prices on the London Metal Exchange (LME) have skyrocketed, and rumors about Tsingshan Holdings Group Co., Ltd. (hereinafter referred to as "Tsingshan Holdings") being squeezed for short positions in nickel futures contracts are rampant.
As a result, this mysterious private steel company was brought under the spotlight of the market.
With the sharp fluctuation of nickel prices, the London Metal Exchange issued an announcement on the evening of March 8 that all nickel transactions executed on or after 0:00 a.m. local time on March 8 in over-the-counter and LME select screen trading systems will be cancelled and will be postponed All spot nickel contracts scheduled for delivery on March 9, 2022, were delivered.
On the evening of March 9, Tsingshan Holdings responded that it will replace domestic metal nickel plates with its high matte nickel plates, and has allocated sufficient spot for delivery through various channels.
Analysts generally believe that the bulls and bears of the nickel futures market in London have reversed, and the aforementioned foreign investors who maliciously squeezed may face the embarrassing situation of "shooting themselves in the foot".
What kind of company is Tsingshan Holdings? Are the market rumors true?
On March 9, a reporter from Securities Times · e company visited the Shanghai headquarters of Tsingshan Holdings. A red fence has been pulled up at the gate of the company.
An employee of Tsingshan Holdings told reporters that the current normal work has not been affected.
"Low-key and strong", a staff member of the same park described Tsingshan Holdings to reporters.
Security is tight
Workers say work is not affected
A group of shipping and trading companies are gathered in the office area of Shanghai Port International Passenger Transport Center in Hongkou District, Shanghai. Tsingshan Holdings is "the best and most powerful company in this office area" according to the staff of the park.
Speaking of Tsingshan Holdings, a staff member of the park said bluntly to the reporter, "They are very rich. Their office building was bought for more than one billion yuan. It was renovated more than a year ago, and the interior and exterior decoration also cost a lot. The company has mines in Indonesia. But usually they are very low-key."
The office building of Tsingshan Holdings is an 8-storey building with the logo of "Tsingshan Industry" hanging on the facade, and several SUVs with Zhejiang license plates are parked at the entrance.
In the 1980s, Tsingshan Industrial was born in Wenzhou, Zhejiang. After decades of development, it has become the largest stainless steel enterprise in the world.
The board of directors of Tsingshan Industrial is located in Shanghai. It has five major groups including Tsingtuo Group, Yongqing Group, Tsingshan Holding Group, Shanghai Dingxin Group and Yongqing Co., Ltd., and has more than 300 subsidiaries. Ranked 279th among the 2021 Fortune Global 500, 80th among the 2021 China Top 500 Enterprises, and 14th among the 2021 China Top 500 Private Enterprises.
"This building belongs to Qingshan. We are a property. We cannot enter without an appointment." Several security guards stopped the reporter at the door.
As the staff of the park said, "The strength of Qingshan can be seen from the decoration." The huge lobby is mainly white and gold, with a large building area.
The reporter noticed that there are few employees in and out of the Qingshan office building, and only a small number of employees go out during lunch time.
"We have our own restaurant on the second floor. The building is well-equipped," an employee of Tsingshan Holdings told reporters.
The Tsingshan employee said he did not understand the rumors of forced positions.
"I don't know about this, and the leader didn't tell us. It was the security guard downstairs who told me that we are still working normally, and it doesn't feel like it has any impact." The employee said that the company just moved from Shanghai Xintiandi this year. There are other industrial parks, the company's headquarters is now in Shanghai, including management is also working in this building.
As for business, the employee said that due to the impact of the epidemic, exports have been reduced in recent years.
The reporter noticed that employees of other companies in the same park as Tsingshan Holdings also paid attention to market rumors.
"There are still many uncertain situations, which may involve commercial secrets. It is normal for the market to speculate a lot." A park employee who passed by the Castle Peak Building told reporters that when talking about his impression of Castle Peak Holdings, the employee said that he was "very low-key".
On the afternoon of March 8, Tsingshan Holdings replied to the media that it was preparing materials and would make a public response afterward.
A reporter from Securities Times · e company found that at present, the official website of Tsingshan Holdings has been unable to open, showing "502 error".
On the afternoon of March 9, the reporter called Tsingshan Holdings, which showed that "the line was busy" and was not connected.
Going overseas to deploy new energy industry
Tsingshan Holdings is a private enterprise specializing in stainless steel production. It has formed a whole industrial chain layout from nickel mining, ferronickel smelting to stainless steel smelting, stainless steel continuous casting billet production and stainless steel plate, rod and wire processing, and also produces new energy fields. The raw materials, intermediate products and new energy batteries are mainly used in energy storage systems and electric vehicles and other fields.
According to the company's investigation, Tsingshan Holdings was established in June 2003 with a registered capital of 2.8 billion yuan. The major shareholder is Shanghai Dingxin Investment Group (hereinafter referred to as "Dingxin Group"), and Wenzhou businessman Xiang Guangda holds 71.5% of the former. shares.
In 2009, Dingxin Group and Indonesia's local Eight Star Group jointly established Indonesia Sulawesi Mining Investment Co., Ltd., and Tsingshan Holdings held 50.35% of the joint venture.
As a result, Tsingshan Holdings started overseas investment in ferronickel production.
On the afternoon of March 9, a reporter from Securities Times · e company visited Dingxin Group, which is located in Pudong New Area, Shanghai. The company's door was locked.
The security guard at the gate also refused the reporter's visit on the grounds that "an appointment is required and a contact person can bring in to enter".
An employee of Dingxin Group left in a hurry after hearing the "rumour of forced position".
In addition, the reporter noticed that in the visiting list of the security booth, the name of "Ruipu Energy" appeared in the visiting column.
It is understood that Ruipu Energy is a battery manufacturer established by Tsingshan Industrial in the field of new energy, focusing on providing solutions for new energy vehicle power and smart power storage.
According to the research report of Haitong Securities, Tsingshan Holdings’ domestic ferronickel business is mainly deployed through Fujian Tsingtuo Group.
At present, Qingtuo Group has formed an annual production capacity of 1.8 million tons of nickel alloys.
Foreign business is realized through Indonesia Qingshan Park (IMIP) and Weidabe Industrial Park (IWIP), with a total production capacity of more than 3.5 million tons/year.
Mastering nickel means mastering the upstream of stainless steel.
In 2019, it has a nickel production capacity of 300,000 tons, accounting for 12% of the global share. In 2022, the production capacity will reach 850,000 tons, making it a veritable "nickel king in the world".
Tsingshan Holdings is now the world's largest nickel exporter and the world's largest stainless steel producer.
It is worth mentioning that another field of nickel application is the new energy field with high market attention.
According to the research report of Ping An Securities, benefiting from the high nickel content of power batteries and the rapid development of new energy vehicles, the global and Chinese nickel demand is expected to grow at a compound growth rate of 4.0% and 4.3% from 2019 to 2025.
Relying on the advantages of abundant upstream resources, Tsingshan began to enter the new energy industry in 2017, striving to build a new energy industry chain of "nickel-cobalt mineral resource mining - hydrometallurgy - precursor - cathode material - battery application".
On December 9, 2021, Tsingshan Holdings announced that its large-scale battery-use high matte project in Indonesia was put into production.
In addition, Tsingshan Holdings is also involved in lithium resources.
In November 2021, French stainless steel and ferronickel giant Eramet announced that it will introduce Tsingshan Holdings as a partner to restart the construction of its 24,000-ton LCM salt lake lithium extraction plant project in Argentina's Centenario Ratones Salt Lake (hereinafter referred to as CR Salt Lake).
A number of A-share companies responded to the impact
As an important stainless steel and ferronickel producer in the world, Tsingshan Holdings has close cooperation with a number of A-share listed companies.
After the limit fell for two consecutive days, Huayou Cobalt announced on the evening of March 9 that the nickel futures market has experienced ultra-abnormal fluctuations recently. So far, the company has not been forced to liquidate the position, and the risk is controllable.
The future trend of nickel futures is uncertain, and there is a risk that the company's hedging business may suffer losses.
Huayou Cobalt said that the current production and operation of the company is normal, and its nickel-cobalt resource development projects in Indonesia, such as the laterite nickel ore hydro-smelting crude nickel-cobalt hydroxide project and the laterite nickel ore pyro-smelting high-nickel matte project, are progressing normally. Among them, the subsidiary Huayue Nickel-Cobalt Co., Ltd. with an annual output of 60,000 tons of nickel metal laterite nickel ore hydro-smelting project has been successfully put into trial production.
"The company has not yet participated in nickel futures trading, and the current position of nickel futures is zero. The 'Qingshan Nickel' short squeeze event hyped in the market has nothing to do with Zhefu Holdings, and the company's production and operation and business performance are not affected by this The impact of the nickel futures incident.” Zhefu Holdings announced on the evening of March 9 that up to now, the company has only carried out futures hedging business for a proportion of the total production of copper and tin. The hedging business of the two metals of tin is carried out normally, the margin is sufficient, and there is no situation of making up the margin due to liquidation.
Zhefu Holdings stated that the company intends to moderately increase the types and margins of commodity futures hedging business, and conduct operational hedging business in a timely manner based on the actual production of relevant metal products and the trend of international bulk commodity prices.
On March 9, Rongbai Technology stated on the interactive platform that the company's production and operation were normal and it did not participate in nickel metal futures trading.
We learned from upstream resource suppliers that some European long-term orders for Russian nickel are still being executed.
From the perspective of the long-term nickel supply and demand balance, the high price of nickel is unsustainable, and nickel is expected to achieve a balance between supply and demand.
GEM announced at noon on March 9 that this nickel futures incident has nothing to do with GEM, and the company's production, operation and operating performance are not affected by this nickel futures incident; GEM's nickel-containing products are priced based on the monthly average price. The implementation of trading, the short-term sharp decline and sharp rise of nickel will not affect GEM's trading and pricing system, and will not have a substantial impact on GEM's operations; the construction and operation of GEM's Indonesian nickel resource project will not be affected by this nickel futures incident.
In addition, MCC stated on the investor interactive platform on March 8: As a centrally-owned listed company, the company strictly abides by the SASAC's regulatory requirements on prudently developing financial derivatives business, and currently does not have any nickel futures business, and said that the current international nickel metal The sharp, rapid rise in futures prices has deviated from fundamentals due to geopolitical factors, low inventories and financial trading.
As an important wet nickel production and technology exporting enterprise in the world, the high price is naturally beneficial to the company, but in the short term, we should also pay attention to the capacity of the downstream market, and in the medium and long term, we must also consider the healthy development of the entire new energy industry chain.
Regarding the follow-up of nickel price, the research report of CITIC Construction Investment Futures said that the current rise of nickel is difficult to explain from the perspective of fundamentals. Although the overall environment is still favorable for nickel price, the follow-up risks cannot be ignored.
After the nickel price rose sharply, the spot market may have fallen into a temporary stagnation state, and the downstream cannot accept the current high price. Some manufacturers may reduce and stop production due to interruption of raw materials, waiting for the market to return to normal.