(Yicai Global) March 11 -- Jinchuan Group has not been involved in any party’s action during the recent global nickel markets volatility, China’s largest manufacturer of electrolytic nickel told Yicai Global today.

The company is operating as normal, Jinchuan said, which is the world’s fourth biggest nickel producer with an annual output of 200,000 tons. It continues to have good and stable relations with both its upstream and downstream clients.

The company only engages in hedging when it has enough spot product to do so and has no major operating risks, the Jinchang, northwestern Gansu province-based firm added.

The remarks come after a rollercoaster few days on the global nickel markets during which the London Metal Exchange halted all trading of the metal on March 8 and the Shanghai Futures Exchange suspended its main contract on the same day due to wild fluctuations in the price.

Nickel futures prices on the London bourse jumped almost three-and-a-half times to USD101,365 a ton on March 8 from the day before. While Shanghai’s most-traded nickel futures contract soared to CNY228,810 (USD36,235) a ton that day.

At the heart of the maelstrom was China’s Tsingshan Holding Group, with an estimated short position of 200,000 tons of nickel. The rocketing prices put it at risk of losing as much as USD12 billion should it close out its short positions according to calculations based on extreme pricing, Securities Daily reported on March 9.

Since then, the world’s second-biggest nickel producer has said it has enough product to meet deliveries, something many industry insiders told Yicai Global that they found ‘hard to believe.’

It would certainly be a wonderful thing if Wenzhou, eastern Zhejiang province-based Tsingshan was really able to find enough nickel for delivery, they said yesterday. But given that overseas and domestic inventories are both so low, it is hard to believe it possible to secure that much supply in such a short period of time.

Should Tsingshan indeed meet its obligations, nickel prices are likely to crash, analysts said, and this will hit those investors who drove up the price hard. Already prices are beginning to plunge, with the main contract on the Shanghai Futures Exchange tumbling by the exchange-imposed limit of 17 percent to CNY222,190 (USD35,000) a ton today.

Editors: Zhang Yushuo, Kim Taylor