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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) has to either pay off the outstanding short positions or prove it has sufficient deliverable nickel 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, known as China’s Nickel King, niè wáng 镍王.
Xiang said in an interview last week (Sina, Chinese):
青山控股实控人项光达,也在昨天晚间对媒体回应称,“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。” The chairman of Tsingshan Holdings last night told media: 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.
The Favourite Five
When a news story is big enough in China, it’s quite common that new words are invented to talk about it.
In our favourite five words this week, there is one very new word which was coined this week, two words that have crossed over from social media and gaming, and two very 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 Huayu 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. yāo niè is a pun 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 and equally matched kingdoms.
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
2. 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 gǔ yè - Zhejiang Huayou Cobalt
青山控股 qīngshān kònggǔ - Tsingshan Holdings
宁波力勤 níngbō lì qín - Lygend Resources & Technology
Investor speak: and some of the basics of short-selling, just in case you didn’t know.
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
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.
Three-character phrases
Dramatic, epic and panic-buying hold our three-character phrases together this week, some of which we have discussed before in earlier newsletters.
戏剧性 xì jù xìng - dramatic
此次围绕镍的多空博弈更有戏剧性,赌注更大,波及面更广 - This short selling gamble is more dramatic, the stakes are higher, and its impact is greater.
史诗级 shǐ shī jí - epic
史诗级逼仓,将青山控股逼上风口浪尖 This epic short has put Tsingshan into the eye of the storm.
First discussed in 27 March 2021 newsletter.
压舱石 yā cāng shí - mainstay
某种程度上,俄镍正是青山敢于在LME做空的压舱石 - To a certain extent, Tsingshan were willing to take short positions because of the mainstay of the Russian supply of nickel.
First discussed in 7 August 2021 newsletter.
买买买 mǎi mǎi mǎi - buy buy buy; panic buy in this context
只能通过“买买买”来解决这种供需的不平衡 - The only thing to do is panic buy in order to address this kind of market imbalance.
Note: a common phrase of live-stream e-commerce sellers.
一杯羹 yībēi gēng - take a share of something
在动力电池领域分一杯羹后,青山控股对于新能源汽车行业也表示出极大的兴趣 - After taking a share in the EV battery market, Tsingshan also expressed a strong interest in entering the electric vehicle market.
Note: first discussed in 27 November 2021 newsletter.
Idioms
余波未止 yúbō wèi zhǐ - aftermath, waves are still reverberating
外资多头“绞杀”国内镍业巨头青山控股的传闻余波未止 - Rumours are still circulating that many international companies are pressuring Tsingshan Holdings.
波谲云诡 bō jué yún guǐ - unpredictable or ever evolving situation
外国政坛的风云突变,外交关系的波谲云诡还是金融市场的疾风骤雨 - There are sudden changes in international politics, turbulence in diplomatic relations, and instability in financial markets.
风云突变 fēngyún tūbiàn - sudden change
疾风骤雨 jífēng zhòuyǔ - torrential storm, instability
令人咋舌 lìng rén zéshé - staggering, speechless
过去一周镍的价格走势令人咋舌 - The changes in the price of nickel over the last week have been staggering.
Note: similar to 不可思议 bùkě sīyì, but not the same - which means incredible, unfathomable
大户人家 dàhù rénjiā - major player
整个集团去年的营收也在3000亿元以上,属于绝对的大户人家 - The entire group's revenue last year was also more than 300 billion yuan. It is clearly a major player in the sector.
命悬一线 mìng xuán yīxiàn - life on the line, holding on by a thread
之所以命悬一线,最关键的问题在于:种类错配 - Its life is on the line because of one key issue: errors in apportioning different grades of nickel.
Phrases
抖三抖 dǒu sān dǒu - the whole industry shudders
青山控股跺一跺脚行业都要抖三抖 - If Tsingshan stamps its foot, the whole industry shakes.
This is adapted from a colloquial phrase which normally follows the structure:
青山控股声吼,地球都要抖三抖 - Tsingshan roars and the whole world shakes.
惊出不少冷汗 jīng chū bù shǎo lěnghàn - shocked into a cold sweat
这次逼空危机没有对青山造成致命一击,但也让人惊出不少冷汗 - This short-selling crisis is not an deal a final blow to Tsingshan, but it was certainly a massive shock.
Related: a more common structure is 惊出一身冷汗 jīng chū yīshēn lěnghàn.
淹死的都是会游泳的人 yān sǐ de dōu shì huì yóuyǒng de rén - those that drown are the ones who can swim; complacency in one’s strength may cause disaster
常言道,淹死的都是会游泳的人。这次的风波,也和青山控股对镍资源的布局有关 - It’s often said that the people who can swim are the ones that drown. Tsingshan was complacent; this crisis is closely linked to Tsingshan’s overall nickel strategy.
Related: 善游者溺 shàn yóu zhě nì - a good swimmer will often drown
咬定青山不放松 yǎodìng qīngshān bù fàngsōng - tenacious like bamboo rooted in the rocks of the mountain; tenacious, never give up
“青山”二字一是厂址在青山村,二是取自“咬定青山不放松”之意 - The name for Tsingshan Holdings comes from where it was based, in Qingshan Village, and the phrase: tenacious like bamboo rooted in the rocks of Qingshan.
Note: a line from the poem 竹石 zhú shí, Bamboo Stone, by Qing dynasty calligrapher and poet, Zhèng Xiè 郑燮. (Watch the Baidu explainer).
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