Chapter 849: Sumitomo Corporation panicked

Just as the trader was speaking, with the system automatically trading, the funds in Sumitomo Corporation's account flowed away like water, exchanged for LME nickel futures contracts.

With the development of technology and the application of computer systems, automated trading became possible in the United States in 1975, of course, it started in the stock market.

However, after more than five years of development and dissemination, automated trading is no longer limited to the United States or the stock market. The London Metal Exchange has also been transformed.

'Manager, our reserve funds are depleted and our positions are full!'

In the blink of an eye, Sumitomo Corporation's account funds were depleted and the position was full. The trader shouted again to the manager, Hyuga Yoshida, who was hurrying over, as if a little anxious, his voice a little shaky.

Sumitomo Corporation's LME nickel futures trading team was very determined to go long and was very confident in its own strength, so the account did not set an upper limit for acquisition, which is why the funds had been depleted so far.

But who knows, the account's remaining balance of just over 100 million US dollars was suddenly cleared.

This is not surprising, as the total value of 10,000 LME nickel futures contracts is over 500 million US dollars. Apart from the 2,400 contracts traded at Sumitomo's purchase price, the accounts of some other small long positions were also filled.

But even so, there are still large amounts of open orders waiting to be automatically traded after the longs have built their positions.

However, no one dared to take the plunge with such a large number of suddenly appearing short orders without knowing the situation, causing the price of LME nickel futures to temporarily stagnate at 8,925 US dollars per tonne.

But under normal circumstances, if the longs did not act quickly, then an avalanche in the price of LME nickel futures today was inevitable.

At this time, the head of the LME nickel futures team, Hyuga Yoshida, walked over in three steps. After seeing the series of numbers, his whole head was buzzing.

Fortunately, he had seen many storms, and shook his head vigorously to clear his mind, but his mood was heavy.

'Manager, what should we do? Should we stop loss and withdraw, or continue to increase our position?'

The trader asked anxiously, but he didn't have the confidence to say this either.

He knew very well that the manager, Hyuga Yoshida, had a one-time limit of 100 million US dollars in the reserve risk account, but even if the entire 100 million US dollars was invested, it would still not be enough to fill the short position's hole.

If he stopped loss and withdrew now, not only would the previous floating profits be lost, but at least 30 million US dollars would be lost!

Yoshida Hyuga's face kept changing, and as he watched the price fluctuate, his heart gradually sank.

However, he was not lacking in blood, and with a stern face, he directly ordered, 'Activate the backup account, with a limit of 20 million US dollars, first cover the position to stabilise the price!

The trader was relieved, and immediately began to switch accounts.

Yoshida Hyuga also knew that the 20 million US dollars were just buying time, so he wasted no time in ordering someone to fetch his immediate superior, Yanagawa Shu, the head of the trading department at Sumitomo Corporation.

With hundreds of millions of dollars at stake, only Yanagawa Shu had the authority to make the decision.

The experienced trader did not buy all at once, but instead bought a little at a time at the price of 8,925 US dollars per ton. Although the price of LME nickel futures fluctuated violently, it was still barely contained.

However, the funds in the account were decreasing at a visible rate.

Just then, a number of scattered buy orders from long positions suddenly appeared, with as many as ten lots and as few as a few lots. The quantity was not large, but it scared the trader and Yoshida Hyuga.

Because these buy orders from long positions were not at the price of 8,925 US dollars per tonne, but at prices such as 8,914 US dollars per tonne, 8,902 US dollars per tonne, 8,905 US dollars per tonne, etc.

The manipulators behind these buy orders were complete idiots!

The price of 8,925 US dollars per ton, which they had worked so hard to maintain, suddenly seemed high, and the price of LME nickel futures finally fell.

8,923 US dollars per ton.

8,921 US dollars per ton.

8,917 US dollars per ton.

...

Seeing the price start to fall, Yoshida Hyuga's face instantly turned livid, and he couldn't help but swear, 'Baka, you bunch of idiots!'

Together with the 2,400 lots of LME nickel futures they had just bought, they now held a total of 6,840 lots of LME nickel futures.

At a price of $8,925 per tonne, the total value of the LME nickel futures contracts held reached $366.3 million.

But as soon as the price fell by just one dollar per tonne, their account would shrink by $41,000.

But look now, it has dropped ten dollars in no time, which means the account has shrunk by 410,000 dollars!

And the London Metal Exchange does not implement a price limit system, so God knows how low the price of LME nickel futures will fall if it is not recovered!

'Manager, ten million dollars has been consumed!'

The voice of the trader sounded again, making Yoshida Hyuga's face even more unpleasant.

Fortunately, just then, a series of hurried footsteps sounded from behind him. Yoshida immediately turned around and, when he saw the person coming, he felt as if he had seen the saviour and felt a sense of relief.

He immediately went up to him and said, 'Minister, you've finally come. Something big has happened. The short position opened at 7,500 US dollars per tonne. The price of LME nickel futures has now fallen.'

He glanced at the trading board, his face turning even uglier, but he still gritted his teeth and said, 'It has already fallen below 8,900 US dollars per ton!'

This means another 600,000 to 700,000 US dollars is gone!

Liuchuan Shuren ignored Yoshida Hyuga and immediately went behind the trader, looking at the strings of numbers with a critical eye. He quickly understood the situation they were in and his face became grave.

'Minister, I have already used the risk account to support the price, but it's all because of these pigs, otherwise the price wouldn't have fallen so quickly!'

Seeing the minister's unpleasant expression, Yoshida Hyuga immediately explained, trying to save a little face for himself.

'These buy orders were not placed by long positions, they were manipulated by short positions behind the scenes!'

Yanagawa Shuren looked at him with burning eyes and said in a stern voice.

'The short position doesn't want to waste time with us at all, it wants to crush us in one fell swoop!'

Yoshida Hyuga took a deep breath and asked, 'Minister, what should we do? The gap is too big!'

There is still a gap of 400 million US dollars, and even if it is a 10% margin, it would still be 40 million US dollars.

Yanagawa Shuren immediately shook his head and said, 'Most of our funds have now been redeployed to the copper futures and aluminum futures trading teams!'

His meaning was clear: he could not come up with so much money to fight the short!

Although Sumitomo Corporation is strong enough to raise this kind of money, the accounts of the copper futures and aluminium futures trading departments are still lying around a total of one billion US dollars.

However, he can't touch this money because going long on copper futures and aluminium futures is an order from the Tokyo president, Keigo Sumitomo, and he dares not disobey!

If the plan fails because of unauthorized action, then he will definitely be blamed, and it is likely that he will be fired and he dares not take such a big risk.

Just then, a series of scattered and hurried footsteps came from the door, followed by the running of a figure. This person, whom he knew, was an employee of the LME zinc futures trading team. Yanagawa Shu's heart sank, and he had a bad feeling in an instant.

When the person saw Yanagawa Shu, he immediately shouted, 'Minister, there is trouble. There is a large short position. Ten thousand lots have been built at a low price. We are directly full. The price is already falling, and there is a high possibility of a margin call!'

A 'short position' is a futures term that refers to a risk situation in which a customer's equity in their account is negative. In other words, the customer not only loses all the margin in their account before opening the position, but also owes the futures company money.

Of course, Sumitomo Corporation itself is a futures company, but it is also a customer of the London Metal Exchange. Sumitomo Corporation has also paid a margin for the account it opened with the London Metal Exchange.

When the margin is insufficient, the London Metal Exchange will remind Sumitomo Corporation, and Sumitomo Corporation has 24 hours to make up the margin. If the margin is not made up within 24 hours, the London Metal Exchange will forcibly close all of Sumitomo Corporation's losing accounts, and Sumitomo Corporation will have to pay for the losses beyond the principal.

Of course, if you don't pay up, the consequences can be serious. The LME will close the door on Sumitomo Corporation, and even if Sumitomo Corporation opens an account again, it will be confiscated to cover losses. The LME will also take Sumitomo Corporation to court, and the court will arbitrate and recover the money.

No matter what, you can't escape!

'Minister, there's a big short in the LME lead futures market. Ten thousand lots have been opened at a low price, and we're now fully exposed. The price has dropped more than 5% in an instant!'

Liuchuan Shuren hadn't even had time to ask the employee who had reported back on the LME zinc futures market about the situation when another figure appeared, and the words that came out of his mouth made everyone's faces turn pale.

At this point, even a fool like Yanagawa knew that his company had been targeted.

Moreover, the enemy was ruthless and completely lethal, leaving them no room to fight back.

Under the current circumstances, even if he put up a billion dollars, it would just be swallowed up with a splash.

At this time, any more hesitation would be fatal!

Yanagawa made up his mind and first instructed Yoshida Hyuga, 'Stop loss and withdraw, quickly, find someone to take over.'

After saying this, he walked quickly towards the door, going to the next few departments to give the order to withdraw, lest he be dragged down to the abyss.

There are many types of metal futures on the London Metal Exchange, including gold, silver, copper, aluminium, zinc, lead, nickel, etc. Sumitomo Corporation has invested in every type of metal futures, the only difference being the amount.

Now zinc, lead, and nickel are all having problems.

If other metal futures also have problems, that would be terrible news!