10 January 2023 – The next manipulation bang on the nickel market? How Big Short suddenly wants to convert copper plants to nickel production – in the end just hot air? Or is there a double winner here? Stainless steel prices stable and on the rise. And ASI calls for export ban on ferrous scrap.
Big Shorts nickel manipulation game continue
Last week we again referred to the manipulation of commodity prices in connection with press releases from the Tsingshan Holding Group and its nickel trader Big Short. This is not the first time in the last two years. In the meantime, media such as Bloomberg and Reuters also point out that Big Short, or Xiang Guangda, Founder of the Tsingshan Holding Group, is exerting massive influence on the market.
After the announcement in February/March 2021 to produce high-grade battery nickel from nickel matte, the botched Big Short nickel shorting in March 2022 and the press release about the start of a nickel processing plant in China last week, now the latest coup: the possible conversion of Chinese copper plants to nickel production. Boom, the next ostensible and perhaps by some hoped for and willfully conjured up shock to the nickel market.
Again, all just rumours from the group’s inner circle
Whether it is at all technically and economically possible to convert a plant from copper to nickel has so far only been tested once according to rumours from the alleged inner circle of the Tsingshan Group. It also remains completely open which process is to be used here.
Processes are costly and environmentally harmful
The methods currently used (and ready for the market), e.g. for the combined processing of nickel-copper-cobalt in the form of low-grade nickel matte, often lead to large material losses, especially in the nickel content. But other raw materials contained in low-grade nickel matte (Ni), such as copper (Cu), cobalt (Co) and iron (Fe), are also lost via the slag. In addition, all processes are not very environmentally friendly, are very energy-intensive, difficult to carry out and, as described above, lead to very high material losses.
Questionable methods of influencing the market
The more than questionable, if not illegal, methods used by Big Short to influence the market should actually call the authorities and regulators to the scene. But little has happened so far.
Battery manufacturers struggle with lack of raw materials
At the same time, the Tsingshan Group is struggling elsewhere with the availability of battery metals and the high costs. As we had already highlighted in our Stainless Cappuccino on the topic.
In the end, only Big Short wins?
Big Short has already shown in the past that he plays a game with nickel and commodity prices. Because he has advantages on the profit and loss side. Buying cheaply to supply his factories with raw materials and selling expensively on the other side to bring the group’s raw materials to the market at a profit. In the end, only to the advantage of the Tsingshan Group and its trader Big Short – because the market reacts exactly as the Chinese expect it too.
Stainless steel prices stable or on an upward trend
Despite the absence of many companies due to the season, stainless steel prices in Asia remain stable or are even rising. The high raw material costs and the low availability (e.g. also of stainless steel scrap) should further increase the pressure on both sides – producers and consumers. A further increase in stainless steel prices can therefore currently be assumed, as well as increasing acceptance on the part of consumers with regard to the new price level.
Scrap export ban called for in Australia
At the end of December 2022, the Australian Steel Institute (ASI) called for the introduction of an export ban. Almost 1.1 million tonnes of ferrous scrap leave Australia every year. With an export ban, Australian steelmakers could benefit from 800,000 tonnes of processed scrap.
Scrap export restrictions in more and more countries
With this, another country joins the ranks of those who have recognised scrap as a strategic raw material and are trying to guard it jealously. Prominent or planned export restrictions on scrap already exist in South Africa, the United Arab Emirates, Kazakhstan and the European Union.
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Disclaimer: Many things here represent our opinion. Others are information from the Internet. We can therefore never claim to be correct or complete. And never base a business decision solely on the news you receive from us.
