Nearly 40 million yuan of nickel blocks from the LME were stolen and turned into stones.


A large number of nickel lumps turned into stone LME credit burst

[Financial Channel/Comprehensive Report] The London Metal Exchange (LME) said on March 17 that they found in a warehouse in Rotterdam, the Netherlands, a bag that was supposed to be full of nickel nuggets, which actually contained a pile of waste rock. About 54 tons of nickel worth US$1.3 million (NT$39.61 million) disappeared.

The owner of the nickel is rumored to be JPMorgan Chase & Co.

In addition to JPMorgan Chase, the delivery of commodity trading giants Trafigura and Stratton Metals has also become the latest sufferer. It is rumored that the nickel blocks stored by the two companies in the LME have also been exchanged for stones, further hitting the market against the LME. Confidence.

Why such a large amount of nickel disappears mysteriously, and the reason has sparked heated discussions in the market.

Please read on...

Inventory metals have been swapped, which seems to be a unique phenomenon in China. In 2014, 220,000 tons of aluminum vapor and nearly 7,500 tons of electrolytic copper stored in the warehouse of Qingdao Port, a Chinese state-owned enterprise, unexpectedly disappeared. CITIC Resources and Qingdao Port They are all state-owned enterprises, and the result of this case is nothing.

The largest shareholder of the LME is the Hong Kong Stock Exchange. Could it be that the Chinese have managed this 146-year-old metal exchange and introduced China's unhealthy market culture into the LME?

Founded in 1877, LME is the world's largest futures and options market for base metals and other metals, and serves as a global benchmark for the prices of industrial metals such as aluminum, copper and nickel.

In 2012, the Hong Kong Futures Exchange (HKEx) successfully acquired it for 1.388 billion pounds (approximately NT$51.839 billion).

Since the members of the board of directors of the Hong Kong Stock Exchange are appointed by Hong Kong, the LME is also seeking approval to open metal mines in China. That is to say, various events in China and the LME may be inseparable.

The LME favored Qingshan, and its century-old reputation was ruined.


The demon nickel incident favored Qingshan in exchange for a series of lawsuits

At the beginning of March last year, the LME nickel price soared 250% within 2 days, once climbing to US$101,365 per ton, while the empty order of 300,000 tons of nickel held by Tsingshan Holdings, the world's largest ferronickel and stainless steel producer, was tragically "epic" "Short squeeze" and lost billions of dollars overnight, and even failed to pay the margin in time.

However, what is shocking is that the LME subsequently "denied its account" and announced that all transactions on that day were cancelled, the nickel price fell back to the closing price on the 7th, and trading was suspended for one week.

However, the LME’s move aroused public outrage, and foreign media even criticized that the risk of losing control of the nickel market has accumulated for many years, but the LME failed to foresee it, and eventually lost its 146-year reputation.

Under normal circumstances, when the nickel price reaches a new high of US$100,000, the LME should ask Tsingshan to increase the margin, otherwise the position will be forced to close.

However, the LME has made a very controversial move to cancel 5,000 nickel transactions, which seems to be deliberately protecting Tsingshan, especially since LME is a wholly-owned subsidiary of the Hong Kong Stock Exchange. This failure to maintain neutrality has aroused public outrage.

Questions abound whether the long-established exchange, the LME, is still trustworthy in setting prices for metals such as aluminium, copper, nickel and zinc.

The LME intervened unreasonably in the transaction, and many institutions and companies filed claims against it.


Traders think LME has been sentenced to death

The "Wall Street Journal" pointed out that the LME's response to this "demon nickel" incident threatened the LME's dominance in the global metals market.

When nickel trading got out of control, LME hesitated, and nickel trading activities were suspended for a week, making nickel companies at a loss, and after resuming trading, they were still restricted and chaotic.

Mark Thompson, a senior hedge fund manager with rich trading experience in the LME, also bluntly said that the LME trapped himself in several bad options, especially canceling the transaction is the worst choice, which is tantamount to a death sentence for the LME .

It has been one year since the "Demon Nickel" incident, and now it is reported that many companies have claimed thousands of pounds from the LME.

The Hong Kong Stock Exchange announced on the 8th yesterday that the LME and LME Clear were claimed by five major institutions for more than 10 million pounds.

The organizations filing the claim include: Commodity Asset Management LLC, Pala Investments Limited, Pentimon Limited, Welton Investment Partners LLC and Sunrise Capital Partners LLC.

The claimant stated that the LME's decision to cancel the nickel contract transaction caused them losses, and the decision was an illegal interference with their human rights, so they claimed more than 10 million pounds (approximately NT$373 million).

Prior to this, the well-known US hedge funds Elliott Associates, LP and Elliott International, LP also filed a lawsuit against the LME and demanded compensation of approximately US$456 million (approximately NT$13.838 billion) from the LME.

The United States has sent letters to LME several times, urging sanctions on Russian metal.


Whether to Boycott Russian Metal LME Dilemma

Since the Russia-Ukraine conflict, Western countries have imposed sanctions on Russia, but since Russia is a major producer of aluminum and nickel, the sanctions do not involve these metals and production companies.

Alcoa has written to the LME three times in September and October last year, demanding a boycott and expanded disclosure of how much Russian metal is in the exchange's system.

"While the global acceptability of Russian metals is clearly morally contested, the LME believes that no moral judgment should be taken or imposed on the wider market," the LME said.

Part of the reason why the LME has not imposed sanctions on Russian metals may be that the LME has already been sued by many companies due to the "demon nickel" incident and has been targeted by regulatory agencies. In addition, if sanctions are imposed on Russian metals, Rusal ( RUSAL) may sue the LME. Under the pressure of multiple sides, even with the support of China, the LME cannot act rashly.

Countries along the Belt and Road have fallen into China's debt trap, and even their mineral resources have been plundered.


China will stop at nothing to import nickel

As one of the indispensable and important raw materials for the manufacture of military equipment, nickel is also a metal that countries are rushing to import.

China, behind the LME, has also had a number of controversial deals on nickel imports.

China promotes the One Belt One Road policy, and many cooperating countries owe a lot of debts, and even mineral resources have been plundered.

Since 2014, in order to develop its domestic industry, the Indonesian government has banned the export of unprocessed nickel ore, requiring domestic processing before exporting. By 2020, the export of nickel ore will be completely banned. However, China has cooperated with the Belt and Road Initiative. Invested in the construction of a local nickel smelter and shipped most of the nickel ore to China in the past two years to develop the electric vehicle industry.

In order to purchase nickel ore to develop manufacturing, China’s Tsingshan Steel Works invested in the construction of processing and refinery plants on Sulawesi, Indonesia, which is rich in nickel ore, to process the nickel ore excavated on the island and directly purchase finished products back to China.

In January this year, Chinese companies also directly cooperated with mining companies to set up refineries locally.

China Construction and its investment in factories claim to increase job opportunities for local people, but in fact, they employ a large number of Chinese employees, taking away many job opportunities from local Indonesian people, and even building Chinese employee dormitories locally.

In addition, the benefits received by Indonesian workers such as salary and treatment are not as good as those of Chinese employees. Therefore, in January, nearly 500 Indonesian workers protested and rioted in the refinery of a local Chinese company, resulting in deaths and injuries of both Chinese and Indian workers.

This situation of robbing other countries' resources for development through development and investment does not only happen in Indonesia.

Countries in the Belt and Road Initiative, including South Africa and South America, all suffer from this.

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