After Tsingshan Holdings Group triggered a historic short squeeze in nickel markets last week, Beijing could now reportedly step in to rescue the Chinese industrial giant.
Chinese authorities could potentially intervene to save Tsingshan from the impact of as much as $8 billion in outstanding short positions on nickel.
In addition to worries about insufficient funds, onlookers also highlighted concerns about physical delivery as Tsingshan produces a lower grade nickel pig iron (NPI) which does not meet the quality standards of the London Metal Exchange where the short positions are recorded.
But now, Beijing could come to the rescue by swapping some of its high grade nickel reserves for Tsingshan’s NPI, according to a «Reuters» report citing unnamed sources.
Xiang Guangda: More Shorting?
There are reportedly ongoing discussions between Tsingshan founder Xiang Guangda and his various brokers and bankers with the 64-year old self-made tycoon considering not to reduce his short positions and maintain his view on falling nickel prices.
Creditors involved include China Construction Bank and J.P. Morgan, reportedly the biggest counterparty to Tsingshan’s nickel trades with around 50,000 out of the over 150,000 tonnes of short positions held with the U.S. lender.
