Nickel price manipulation, is suspicion finally turning into evidence?
Nickel price manipulation, is suspicion finally turning into evidence?

18 May 2022 – How real are the current prices after the nickel manipulation? And what influence do big US financial institutions and Chinese nickel producers have on such things? World’s largest shipping group posts best first quarter ever. And the European Commission wants to significantly increase the share of renewable energies by 2030 – a great opportunity for industrial metals.

Nickel manipulation: Is suspicion finally turning into evidence?

Nickel price manipulation has a long tradition. Already in 2019, 2021 and now in 2022, the Chinese nickel and stainless steel giant Tsingshan Group has deliberately influenced prices.

Influencing commodity prices is also a daily occurrence at the US financial services provider J.P. Morgan Chase, which significantly finances the commodity trading activities of Tsingshan Group and its trader “Big Short”.

Most recently, J.P. Morgan Chase had to settle with the US Department of Justice for a fine of more than 920 million US dollars. Among other things, for manipulative and fraudulent behaviour and spoofing, which spanned at least eight years and included hundreds of thousands of fake orders for precious metals.

What is spoofing in the financial markets?

Spoofing in financial markets is mostly carried out by hedge funds and high-frequency traders.

A market player who engages in spoofing sends one or more sell or buy orders that are large relative to normal trading volume, and then withdraws them from the market in a flash before executing them.

This influences the other market participants because they adjust the prices of their sell and buy orders accordingly. The spoofer then uses this market movement to his own advantage and can then sell more expensively or buy more cheaply.

Penalties are often calculated in

According to our research, the US authorities have imposed a total of 1.6 billion US dollars in fines on the financial house over the last 10 years as a result of proven manipulations on the commodity markets.

The sheer amount of manipulation on the commodity markets – hundreds of thousands are known to the US authorities, the number of unreported cases is probably much higher – makes it clear how much capital speculators like J.P. Morgan Chase and others can make out of it.

Penalties from the authorities are accepted here because they are probably already priced in or are significantly lower than the possible losses or profits.

Financial service providers hold shares in commodity exchanges

In this case, the situation is aggravated by the fact that J.P. Morgan Chase holds substantial stakes in the world’s commodity exchanges – such as the European London Metal Exchange (LME), the Asian Hong Kong Exchange and Clearing (HKEX) and also in the American commodity exchange market where they had just loudly considered moving nickel trading there in order to create more confidence in the nickel price again. J.P. Morgan also has at least one membership in the Dalian Commodity Exchange (DCE) and Shanghai Future Exchange (SHFE).

Do nickel manipulations continue?

In view of the repeated nickel manipulation attempts on the part of the Tsingshan Group and the proven market manipulation by J.P. Morgan, one can imagine how real the current nickel price really is. Especially when you have a company that has gambled away more than 8 billion dollars and needs the lowest possible nickel price to be able to save itself.

Logistics: Record quarter for shipping companies

Due to high demand, many shipping companies posted record profits in the first quarter of 2022. In particular, AP Moeller-Maersk, the world’s largest shipping company, announced on Wednesday that it had posted its “most profitable quarter ever” thanks to higher freight prices and more contract wins. The Copenhagen, Denmark-based company reported revenue of $19.3 billion for the first three months of the year, up from $12.4 billion a year earlier.

Good outlook for the metalworking industry

The European Commission wants to adjust its climate targets and significantly adjust renewables by 2030, according to recent reports. In the European Parliament, there is talk of at least 45%, according to sources. A sporting goal that will hardly be achievable without the use of enormous amounts of raw materials.

Simplify approval procedures

In order to achieve this, the approval procedures, e.g. for wind power plants, are to be significantly simplified. The European Commission’s draft states that the approval procedures in certain areas are to be reduced to one year and outside these zones to two years. Currently, these still take far too long and often face high hurdles.

Significant increase in demand for industrial metals expected

If this adjustment of the Fit for 55 targets is implemented, there is likely to be an enormous increase in demand for steel, stainless steel, aluminium and copper, but also for battery metals such as nickel, lithium and cobalt.

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