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One of the world's top nickel producers faced massive losses on its short positions after prices soared to over $100,000 per tonne last week, forcing the London Metal Exchange to halt nickel trading.
According to reports (Reuters, English), Tsingshan Holdings (青山控股 qīngshān kònggǔ) had to pay off the outstanding amounts or prove it has sufficient nickel supply to repay in kind. The amount owed could be as high as $8 billion.
The founder of the company, Xiàng Guāngdá 项光达, is a low-key but legendary entrepreneur from Wēnzhōu 温州. He’s known as China’s Nickel King, niè wáng 镍王.
Xiang said in an interview last week (Sina, Chinese):
老外的确有些动作，正在积极协调。我们接到很多电话，国家有关部门和领导对青山都很支持。青山是家优秀的中国企业，仓位和经营都没有问题。International companies are making moves and we are actively coordinating. We’ve received lots of calls. The relevant authorities in China and their leaders are very supportive of Tsingshan. We are a good business and there’s no problem with our positions and operations.
There’s lots of discussion in the Chinese press about the predicament of Tsingshan and Xiang, and of the Nickel market (Sohu, Chinese):
被称为“工业维生素”的镍，差点在期货市场上成了青山控股的“毒药” - Nickel, which has been termed as the ‘vitamins of the industry’, almost became the poison of Tsingshan Holdings on the futures markets.
So this week we explore the conversations in China about Xiang and the crisis he and his business find themselves in.
Favourite Five
When a news story is big enough in China, it’s common that new words are invented to talk about it.
In our favourite five words about the Nickel crisis this week, there is one new word which was coined this week, two words that have crossed over from social media and gaming, and two old idioms.
躺枪 tǎng qiāng - ‘lying gun’, getting shot even when lying down; become unexpected collateral damage in a situation
华友钴业“躺枪”背后，其在镍金属业务层面与青山控股多有交集 - Behind Zhejiang Huayou Cobalt getting caught up as collateral damage, there are lots of links with Tsingshan holdings and its nickel business.
Note: shortened version for ‘getting shot even when lying down’ (躺着也中枪) is Internet slang which originates from the 1991 Hong Kong movie, Fight Back to School 逃学威龙.
妖镍 yāo niè - Nickel crisis
这轮“妖镍”风起，和全球镍资源的分布及各国镍矿品位高低有着一定关联 - This Nickel crisis arose partially due to the distribution of global nickel resources and varying qualities of nickel ore in different countries.
Note: yāo means ghost or devil. yāoniè is a play on words as it sounds the same as the word 妖孽 yāoniè, which means an event associated with evil or misfortune.
神助攻 shén zhùgōng - ‘spiritual assist’, miraculous help
这次青山之所以能涉险过关，是因为LME一系列神助攻 - Tsingshan were able to get through this crisis thanks to a series of miraculous actions taken by LME.
Note: from the basketball phrase 助攻 (zhùgōng) meaning ‘assist’, which then become a common term in League of Legends gaming chatrooms. It means helping to achieve something that is virtually impossible.
三分天下 sān fēn tiānxià - split between three main players
目前当地镍行业呈现出印尼本土企业、西方矿企和中资企业三分天下的局面 - At the moment the local nickel market has three main players - local Indonesian companies, Western mining companies and Chinese firms.
Note: An idiom which originates from the Three Kingdoms Period, when the whole of China was split into three separate states.
城门失火，殃及池鱼 chéngmén shīhuǒ, yāngjí chíyú - the city gates are alight, bringing disaster to fish of the moat
城门失火，殃及池鱼。但华友钴业仍然表示，该事件并不会影响公司合作项目建设 - When the fire reaches the city gates, disaster also comes to the fish of the moat. However, Huayu Cobalt have confirmed that this will not impact the cooperation project it has with Tsingshan Holdings.
Note: describing a knock-on effect or being in the wrong place at the wrong time
Consuming the Conversation
Basics
The three main Chinese companies you need to known to read into this story are:
华友钴业 huá yǒu gǔyè - Zhejiang Huayou Cobalt
青山控股 qīngshān kònggǔ - Tsingshan Holdings
宁波力勤 níngbō lìqín - Lygend Resources & Technology
Investor speak: and some of the basics of short-selling…
做空 zuò kōng - short selling (逼空 bī kōng - short squeeze)
交割 jiāo gē - settlement
头寸 tóu cùn - position
Useful words
绞杀 jiǎo shā - strangle (here it means crisis)
种种线索显示，其与这场“绞杀”事件的另一方——青山控股有着密切关联 - There are many clues that show this situation has close links with the other party of the nickel crisis, Tsingshan Holdings.
撕咬 sī yǎo - bite, chew
中国最大镍矿贸易商宁波力勤董事长蔡建勇总结道：“我们就好像一个小动物在旁边看着一个大象被嗜血者撕咬。” - The chairman of China’s largest Nickel trading company, Lygend, Cai Jianyong, said: ‘it was like watching an elephant being ripped apart by vampires in a feeding frenzy’.
Note: 嗜血者shìxiězhě - blood suckers, vampires (I got the pronunciation of this wrong in the audio, listen to the example sentence in the member site data base for the correct pronunciation).
新贵 xīn guì - new player or star in a market
这次的主角变成了不锈钢巨头以及新能源新贵，青山控股 - The leading role has become the major company in steel and the new player in new resources, Tsingshan Holdings.
家底 jiā dǐ - substantial resources
以这样雄厚的家底和成本优势，青山在LME上的操作非常合理 - With such advantages in its own resources and its low costs, Tsingshan has the ability to operate in this way on the London Metals Exchange.
