The disruption in the nickel market follows volatility in other commodities since Russia invaded Ukraine.EVGENIA NOVOZHENINA/Reuters
The London Metal Exchange (LME) suspended nickel trading on Tuesday, after the price of the base metal skyrocketed to a record amid escalating uncertainty around major supplier Russia, and after an intense short squeeze.
Nickel rose to a record US$101,365 per tonne, more than doubling in a matter of hours. The previous all-time high was US$51,800 per tonne reached in 2007, at the tail end of a near-decade long economic boom.
Bart Melek, head of commodity strategy at TD Securities Inc., wrote in a note to clients that the “epic” rally on the LME was ignited by fears that global supplies will tighten, but then took on “a life of its own,” as traders failed to make margin calls.
When a nickel futures contract is sold short, traders borrow the securities from a brokerage, and then immediately sell in the hope the price will fall. If the trade works out, the investor buys back at the lower price, returns the security to the original investor, and books a profit. In this case, the opposite happened, and at warp speed. The nickel price jammed dramatically higher in a matter of hours, leaving shorts with massive paper losses. As traders moved to cover their positions, their purchases put even more intense upward pressure on nickel.
“How much supply comes from Russia, how messed up it is, how people hedge themselves more than they used to,” said Bill Harris, portfolio manager with Toronto-based Avenue Investment Management. “It’s just stunning what can happen.”
The LME, one of a handful of key global venues for metals trading, said it is planning to reopen the nickel trading market in an orderly fashion after cancelling Tuesday’s trades. But the timing is uncertain, and market watchers are bracing for more volatility.
“Big earthquakes create big aftershocks,” said Mark Selby, chief executive officer of Canada Nickel Co. Inc. “I think you’re going to see substantial, US$10,000-a-tonne a day moves in the metal price over the next couple of months.”
The nickel and wider commodity markets have experienced intense market dislocation in the past and recovered. In 1980, the Hunt brothers of Dallas famously manipulated the silver market, and were instrumental in the price of the precious metal rocketing five-fold in a few months. Later that decade, the LME shut down trading in tin for about four years after the international tin cartel collapsed. A retail buying binge driven by social media caused wild swings in the prices of uranium and silver last year.
The disruption in the nickel market follows volatility in other commodities since Russia invaded Ukraine. Crude oil, potash and wheat have exploded in price because of Russia’s importance as a supplier. Gold, historically an asset of last resort during times of great uncertainty, is also trading near an all-time high.
Nickel is one of the workhorse metals of the global economy. A key input in the manufacture of stainless steel, it is also increasingly used in electric car batteries, and alongside lithium and cobalt, pitched as part of a trifecta of metals used in the transition to cleaner energy.
After Indonesia and the Philippines, Russia is the world’s third-largest nickel producer. Last year, it produced 250,000 tonnes, or close to 13 per cent of global output.
Canada is the sixth biggest global player, but over the past few decades, its influence has waned. Canada’s overall production has fallen more than 35 per cent since the mid-2000s, in large part owing to mine depletion. None of the publicly traded Canadian-owned nickel giants are left. The biggest producers were sold in the 2000s to foreign companies, which was controversial even at the time. Brazil’s Vale Ltd. bought Inco Ltd., the operator of both major mines in Sudbury and Voisey’s Bay in Labrador. Xstrata PLC, now Glencore PLC, bought Falconbridge Inc., the operator of mines in Sudbury, as well as Raglan in Quebec. Canadian Royalties Inc. sold the Nunavik nickel project in northern Quebec to Chinese state-owned enterprise Jilin Jien Nickel Industry Co. Ltd.
Mr. Selby, a former Inco executive, laments the sale of these assets, saying “there’s no way” the Canadian government would allow that now, especially given the importance of nickel to the country’s economic security.
He pointed to the recent furor after the federal government allowed the sale of Canadian lithium development company Neo Lithium Corp. to a Chinese state-controlled company without a formal national security review as evidence that the zeitgeist has changed. The sale of Neo Lithium incited fierce debate over how far Canada should go to protect its critical minerals industries, and resulted in parliamentary hearings that put the federal industry minister on the defensive.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
:format(jpeg)/cloudfront-us-east-1.images.arcpublishing.com/tgam/YDMMWU7LXZLS5KDE7A5PZL6D4I.JPG)
