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One Of China’s Largest Banks Fails To Pay Margin Call After Today’sMonster Nickel Squeeze

One Of China’s Largest Banks Fails ToPay Margin Call After Today’s Monster Nickel Squeeze

Around the time Peabody was served witha $534…

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7 mins ago

on

March 7, 2022

Thisarticle was originally published by Zero Hedge

OneOf China’s Largest Banks Fails To Pay Margin Call After Today’s Monster NickelSqueeze

Around the time Peabody was served with a $534million margin call on its hedging coal futures short, which it funded with a new $150MM unsecured (10%) revolver from Goldman Sachs, one of China’s largest banks was also served with a margin call for hundreds of millions of dollars on a nickel short gone terribly bad after the price of Nickel did… well this:

However, unlike Peabody, a unit of China Construction Bank Corp – one ofChina’s “Big Four” banks – was given additional time by the London MetalExchange to payhundreds of millions of dollars of margin calls it missed Monday amidan unprecedented spike in nickel prices. The reprieve from the LME – which just last week sent out thousandsof erroneous margin calls on metals contracts – means that the unit,called CCBI Global Markets, is not formally in default, Bloomberg reportedciting sources.

The details of the non-payments aren’t quite clear:Bloomberg notes that the deferred default “isn’t necessarily an indicator ofany problems at the parent company” although Bloomberg may be merely trying notto antagonize a major client. Instead, the media conglomerate suggests that thenon-payment is more likely due to a failure by one of its metals-industryclients to make margin payments to CCBI Global Markets, which is a broker onthe LME’s open-outcry trading floor. That in turn, left CCBI Global Marketsstruggling to arrange payment of the unusually large margin calls after the endof the business day in Asia, as nickel prices exploded throughout Monday.

As reportedearlier, Monday’s monster squeeze was driven by market participants with short positions being forced to close out as they couldn’t meet margin calls.

But while a big Chinese bank may have had immunity, others may not be solucky: Bloombergpreviously reported that Chinese entrepreneur Xiang Guangda – known as “Big Shot” – had a large short position on the LME through his company, Tsingshan Holding Group, the world’s largest nickel and stainless steel producer. It’s unclear whether that particular trader received a margin call and if he paid it.

And so, as we wait for more massively short squeezed names to emerge, wecan’t help but wonder if this is precisely the start of the “liquiditycrisis” predictedby Zoltan Pozsar; after all, he has called virtually everything else spot on so far