NICKEL NEWS, page-421

Some thoughts of today's reopening of the LME Ni market:

It seems that the margin calls have NOT been paid and JPM et al have allowed Tsingshan a stand-still position?
Really? how stupid are these people?? OR unless huge political pressure has been applied???
The MASSIVE bet is that Ni prices will fall on the open and the Big SHORT will start to unravel???
That wont & can't happen... I'll get to the reason shortly.


However consider this:

This is no longer about the Supply & Demand for Ni.
More importantly is where it is warehoused, not its price, & 'how can I get it to my manufacturing plants'.
Basically supply chain disruption logistics.
About 300 tons a day is used in industrial processes (that's 15 Semi loads)
Currently at the LME about 76K tons. Say 9 months industrial usage.
Some of this Ni is likely to be in unfavourable geographical locations or jurisdictions.
Shipping containers, ships and all associated logistics are seriously expensive and/or compromised at this time.

So lets assume that:

Only about 50% of LME Ni is available for immediate 'good delivery'.
If I was the purchasing manager for any serious manufacturing plant my immediate thought would be to buy and stockpile.
NOT COST, certainly not in an inflationary environment, that just gets past-on.
Manufactures that can't manufacture... now that seriously expensive, compared to expensive Ni.

Now lets consider the LME open:

My bet is about $45k ish?
However my view is that it will open and close within a minute.

Insolvent:

None of this would have come-about if Tsingshan were in a position to pay their margin calls: they can't: they are insolvent.
A company that is supposedly turning over $1B. a week cant' find $8B.??

Asymmetric price support for Ni.

It's no longer about the price of Ni.
It's about shorting JPM et al they are on the hook for about $8 Bill., now, & with a strong Ni price will be on the hook for a further $8 Big-ones.
That's assuming the market is only short 150,000 tons. To me this seems like the Iceberg syndrome, It's what you can't see that's dangerous!!!
Remember we are dealing with the Chinese Government that has just Strong-Armed JPM & the LME into waving an $8 B. call...

So:

The play today is to short JPM et al and buy Ni futures, they are only going to get more expensive.

May you live in interesting times. It's time to re-read Sun Tzu, The Art of War, best business book ever written

Cheers xanax