Abstract
In March 2022, the nickel futures market at the London Metal Exchange (LME) experienced a massive short squeeze. Tsingshan Holding Group (hereinafter "Tsingshan"), China's leading stainless steel producer and a major short seller on the market, suffered substantial losses. At the time, Tsingshan held short positions of 200,000 tons in nickel futures contracts for the March delivery. However, the nickel matte it produced simply cannot meet the LME's delivery requirements. Additionally, "black swan" events such as Russia's Ukraine invasion made it more difficult for the company to source enough deliverable nickel to repay in kind. Due to a spike in nickel futures prices near the delivery date, Tsingshan recorded book losses of over ¥8 billion, and the nickel futures market descended into chaos. On March 9, the LME unexpectedly halted nickel trading and canceled trades from midnight on March 8, suspending the market entirely. All of this begs three questions: Why was Tsingshan subjected to a short squeeze? What risks are likely to occur in futures trading? How can companies fine-tune their futures trading strategies? This incident can serve as a stark warning to Chinese companies.
Translated title of the contribution | Tsingshan: A Short Squeeze on the LME’s Nickel Futures Market |
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Original language | Chinese (Simplified) |
Number of pages | 17 |
Publication status | Published - 20 Jul 2024 |
Case number
FIN-24-063Case normative number
FIN-24-063-CCCase type
Field CaseUpdate date
12/01/2025Supplement
For more details, please visit www.chinacases.orgPublished by
China Europe International Business SchoolKeywords
- Tsingshan Holding Group
- futures
- Hedging
- nickel
- risk management
- futures exchange
- short squeeze
- derivative financial instrument
- Speculation
Case studies discipline
- Finance
Case studies industry
- Manufacturing
- Mining, Quarrying, and Oil and Gas Extraction