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Chinese Nickel Giant Tsingshan Faces $8 Billion Trading Loss as Ukraine War Upends Market

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HONG KONG—Chinese nickel titan Tsingshan Holding Group faces billions of dollars in trading losses, people familiar with the company said, after Russia’s war in Ukraine set off an unprecedented rise in the price of a key metal used in stainless steel and electric-vehicle batteries.

The paper loss stood at $8 billion on Monday, before violent moves in nickel prices led the London Metal Exchange to suspend trading in the metal on Tuesday, one of the people said. Late Tuesday, the exchange said it anticipates trading won’t resume before Friday.

Tsingshan couldn’t be reached for comment. Chinese media outlets reported the $8 billion loss earlier Tuesday.

Tsingshan’s founder,

Xiang Guangda,

told a Chinese media outlet that “there have been some moves by foreigners,” and that it is in active negotiations with relevant parties, without specifying who they were and what was being negotiated.

Mr. Xiang was also quoted saying that “relevant government departments and leaders are all very supportive of Tsingshan. Tsingshan is a solid Chinese enterprise and our positions and operations do not have problems,” according to the report in Yicai, a financial-news outlet.

Some of Tsingshan’s creditor banks in China have become concerned about the effect of the company’s trading losses on its balance sheet, according to the people familiar with the company. They were assured by the firm on Tuesday that its financial position was sound and that it could weather even “extreme losses” from the forward contracts, according to one of the people.

Privately held Tsingshan, which means “green mountain,” is based in the Chinese city of Wenzhou and owns production plants in Indonesia, India and Zimbabwe. Founded in 1988, the company roiled the nickel market in recent years after it produced a flood of low-cost material known as nickel-pig iron, weighing on global prices.

More recently, it has muscled into the electric-vehicle industry, supplying large volumes of nickel matte to EV battery manufacturers in China and elsewhere. The firm recorded $19 billion in revenue last year.

For years, Tsingshan routinely sold nickel using forward contracts as part of its regular hedging, according to the people familiar with the company.

A big question in the metals market is whether the company also stands to make big profits from the price rise on the metal it produces, which could offset its trading losses on the LME. A trader said the answer would in part depend on the extent to which Tsingshan had locked in prices for its metal.

Prices of oil, natural gas, wheat and industrial metals have experienced haywire moves since Russia invaded Ukraine last month, a sign of the unexpected economic consequences of Russia’s invasion and the punishing sanctions unleashed in response. Russia is a major supplier of nickel, which was already in short supply due to strong demand as an ingredient in lithium-ion batteries that power electric vehicles.

Civilians fled the city of Sumy as Ukraine and Russia agreed on a limited cease-fire there; residents said soldiers ransacked their homes in Irpin; Ukrainian President Zelensky posted defiant video messages. Photo: Christopher Furlong/Getty Images

Nickel prices usually move a couple of percent a day. They surged 66% Monday and then on Tuesday, the price briefly doubled. “I don’t think I can ever recall seeing a chart that looks like that,” said

Geoffrey Sambrook,

who traded on the LME for almost three decades for companies including

Rothschild

& Co. and now blogs under the pseudonym Lord Copper.

The advance in nickel prices, beginning with the invasion, inflicted losses on companies, including Tsingshan, that had sold nickel contracts to lock in prices for their metallic products. Those companies, their banks and their brokers struggled to meet margin calls from exchanges, traders said. They rushed to close out losing positions by buying back nickel contracts.

Hardly anyone would sell to them, the traders said, so the purchases led to a huge rise in prices in a self-reinforcing dynamic known as a short squeeze. The crescendo arrived early Tuesday, when the price of nickel on the London Metal Exchange hit a record high of over $100,000 a metric ton before pulling back somewhat.

Nickel cathode sheets at a plant in Russia last year.



Photo:

Andrey Rudakov/Bloomberg News

The LME, a unit of

Hong Kong Exchanges and Clearing,

suspended the nickel market, the first time it has frozen trading for a metal since the collapse of an international tin cartel in 1985.

The exchange said trading could be closed for several days, giving market participants time to find cash to pay margin requirements. Nickel trades carried out on Tuesday before the suspension will be canceled. The LME said it would lay out further steps to ensure the market acts in an orderly way when it reopens.

Principa Capital, a London-based macro hedge fund put on long nickel positions last week and tried to liquidate them Tuesday morning, but the trades were later canceled and are under review by the LME.

“It’s not very clear how trades will be closed or marked. This is creating a lot of uncertainty,” said

Ashraf El-Ansary,

Principa’s managing partner.

The LME—with an arcane collection of contracts and a diverse array of miners, traders and investors—is occasionally home to unusual market moves. U.S. sanctions on Russian producer EN+ Group caused aluminum prices to jump four years ago.

In 1996, Japanese trader

Sumitomo Corp.

racked up billions of dollars in losses after chief trader

Yasuo Hamanaka

tried to corner the copper market. Mr. Hamanaka would go to prison for fraud and forgery.

Write to Jing Yang at Jing.Yang@wsj.com, Rebecca Feng at rebecca.feng@wsj.com and Joe Wallace at Joe.Wallace@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Teladoc Tumbled 38% After Big First-Quarter Loss. Is It Just a Pandemic Play?

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After pandemic drop, Canada’s detention of immigrants rises again By Reuters

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© Reuters. FILE PHOTO: Two closed Canadian border checkpoints are seen after it was announced that the border would close to “non-essential traffic” to combat the spread of novel coronavirus disease (COVID-19) at the U.S.-Canada border crossing at the Thousand Isla

By Anna Mehler Paperny

TORONTO (Reuters) – Canada is locking up more people in immigration detention without charge after the numbers fell during the pandemic, government data obtained by Reuters shows.

Authorities cite an overall rise in foreign travelers amid easing restrictions but lawyers say their detained clients came to Canada years ago.

Canada held 206 people in immigration detention as of March 1, 2022 – a 28% increase compared with March 1 of the previous year. Immigration detainees have not been charged with crimes in Canada and 68% of detainees as of March 1 were locked up because Canada Border Services Agency (CBSA) fears they are “unlikely to appear” at an immigration hearing, according to the data.

The rise puts Canada at odds with Amnesty International and other human rights groups that have urged Ottawa to end its use of indefinite immigration detention, noting CBSA has used factors such as a person’s mental illness as reason to detain them.

A CBSA spokesperson told Reuters that “when the number of entries (to Canada) goes up, an increase in detention is to be expected.” CBSA has said in the past it uses detention as a last resort.

A lawyer told Reuters her detained clients have been in Canada for years.

In the United Kingdom, too, immigration detention levels rose last year after dropping earlier in the pandemic, according to government statistics. Unlike Canada, the United States and Australia, European Union member states have limits on immigration detention and those limits cannot exceed six months.

The rise in detentions puts people at risk of contracting COVID-19 in harsh congregate settings, refugee lawyers say.

Julia Sande, Human Rights Law and Policy Campaigner with Amnesty, called the increase in detentions “disappointing but not surprising,” although she was reluctant to draw conclusions from limited data.

The number of immigration detainees in Canada dropped early in the pandemic, from a daily average of 301 in the fourth quarter (January through March) of 2019-20 to 126 in the first quarter (April through June) of 2020-21.

FEW NO-SHOWS AS DETENTIONS DROPPED

Detaining fewer people did not result in a significant increase in no-shows at immigration hearings – the most common reason for detention, according to Immigration and Refugee Board data.

The average number of no-shows as a percentage of admissibility hearings was about 5.5% in 2021, according to that data, compared to about 5.9% in 2019.

No-shows rose as high as 16% in October 2020, but a spokesperson for the Immigration and Refugee Board said this was due to people not receiving notifications when their hearings resumed after a pause in the pandemic.

Refugee lawyer Andrew Brouwer said the decline in detention earlier in the pandemic shows Canada does not need to lock up as many non-citizens.

“We didn’t see a bunch of no-shows. We didn’t see the sky fall … It for sure shows that the system can operate without throwing people in jail,” Brouwer said.

He added that detainees face harsh pandemic conditions in provincial jails – including extended lockdowns, sometimes with three people in a cell for 23 hours a day.

Refugee lawyer Swathi Sekhar said CBSA officials and the Immigration and Refugee Board members reviewing detentions took the risk of COVID-19 into account when deciding whether someone should be detained earlier in the pandemic but are doing so less now.

“Their position is that COVID is not a factor that should weigh in favor of release,” she said.

“We also see very, very perverse findings … [decision-makers] outright saying that individuals are going to be safer in jail.”

The Immigration and Refugee Board did not immediately respond to a Reuters request for comment.

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Nasdaq futures rise as market attempts comeback from April sell-off, Meta shares soar

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Stock futures rose in overnight trading as the market shook off the April sell-off and investors reacted positively to earnings from Meta Platforms.

Futures on the Dow Jones Industrial Average added 70 points or 0.2%. S&P 500 futures gained 0.7% and Nasdaq 100 futures jumped 1.2%.

The moves came as shares of Meta surged more than 18% after hours following a beat on earnings but a miss on revenue, a sign that investors may see signs of relief in the beaten-up tech sector. Shares were down 48% on the year heading into the results.

Meanwhile, shares of Qualcomm gained 5.6% in extended trading on the back of strong earnings while PayPal rose 5% despite issuing weak guidance for the second quarter.

“I think a lot of people want to believe that earnings are going to pull us out of this, but earnings are not what got us into this,” SoFi’s Liz Young told CNBC’s “Closing Bell: Overtime” on Wednesday. “… But the reality is there are so many macro headwinds still in front of us in the next 60 days that the market is just hard to impress.”

The after-hour activity followed a volatile regular trading session that saw the Nasdaq Composite stoop to its lowest level in 2022, as stocks looked to bounce back from a tech-led April sell-off. The index is down more than 12% since the start of April.

In Wednesday’s regular trading, the tech-heavy Nasdaq ended at 12,488.93, after rising to 1.7% at session highs. The Dow Jones Industrial Average rose 61.75 points, or 0.2%, to 33,301.93 propped up by gains from Visa and Microsoft, while the S&P 500 added 0.2% to 4,183.96.

Investors await big tech earnings on Thursday from Apple, Amazon and Twitter, along with results from Robinhood. Jobless claims are also due out Thursday.

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