Chapter 801: Li Yi’s Plan!

Li Family Manor. Study!

Li Futiao and Li Yi sat across from each other at a small round table, on which sat a white porcelain teapot and two exquisite cups.

After briefly rinsing the cups, Li Futiao poured tea for Li Yi as he said, “The personnel and funds are all in place. Now, can you tell me your plan?”

Li Yi nodded and replied, “I intend to go long on heavy metals like steel, aluminum, and copper!”

At those words, Li Futiao was completely taken aback.

It took him a long moment to recover before he said, “Are you sure you want to go long on these heavy metals? You know the global steel industry is currently suffering from severe overcapacity. Can you really make money by going long on these metals?”

“Yes, and I’ll make a fortune!” Li Yi said with certainty.

“Brother Li Yi, do you think international steel prices will rise significantly in the future?” Li Futao asked again.

“They will go up—at least double!” Li Yi replied.

“Will the increase be that big?”

“Based on my assessment, it should be about that much!” Li Yi said with certainty.

Keep in mind that starting next month, the famous Falklands War is about to break out. Once the war begins, the prices of strategic materials like steel, aluminum, and copper—as well as precious metals, and even bulk agricultural products like grain and cotton—will skyrocket in a short period of time.

Among these rising commodities, steel saw the sharpest increase, soaring from 160 pounds per ton before the war to 330 pounds—more than doubling in price.

“If steel prices really can double in such a short time, then this is definitely worth planning for!” Li Futao remarked.

“Old Li, contact Yunbao and the others immediately. Tell them to split all their available funds in half. Use one half to acquire steel, copper, and aluminum futures contracts on the market with 5 to 10 times leverage, and allocate no less than half of that amount to purchasing steel contracts being sold off by the Sheffield Steel Consortium!”

Li Yi continued, “The remaining 1.8 billion pounds should be used entirely to acquire steel on the market across the British Isles. They can entrust a professional firm to handle this!”

Hearing Li Yi’s instructions, Li Futao was momentarily baffled.

“Shorting or going long can be done directly in the futures market—why would we need to buy up steel on the open market? What kind of strategy is this?”

After all, buying steel on the open market not only requires massive capital but also storage and warehousing space—which is a huge expense in itself.

Most importantly, the returns on this venture are nowhere near comparable to those from futures trading!

“Brother Li Yi, why buy up steel on the open market? Wouldn’t it be better to invest all the money in the futures market?”

Li Yi paused for a moment, then said something that took Li Futiao completely by surprise: “Old Li, the major shareholder behind Sheffield Steel Group is the Sassoon family!”

“You want to strike at the Sassoon family by targeting Sheffield Steel?” Li Futiao asked, somewhat surprised.

“Exactly. As far as I know, Sheffield Steel is one of the Sassoon family’s most important industrial holdings. Since the company believes steel prices have peaked in recent years, they’ve been shorting the steel market to lock in profits—dumping massive amounts of steel futures contracts annually. This presents a rare opportunity for us!”

Li Yi continued, “As long as we buy up large quantities of their steel futures and then acquire massive amounts of steel from the market, there’s a high probability the company won’t have enough steel to fulfill its contracts. At that point, we can completely drive this steel company into bankruptcy!”

Li Futao thought for a moment and said, “I understand your plan, but…”

“But what?”

“It’s too risky!”

Li Futao then said in a grave tone, “You’re planning to force Sheffield into default—or even bankruptcy—by making it impossible for them to fulfill their delivery obligations.”

“But have you considered that London and Europe are separated by nothing more than the English Channel? If necessary, they could easily mobilize steel from across Europe to fulfill their obligations. What would we do then?”

Li Yi replied calmly, “If they really have the capacity to deliver, then we’ll accept it. As long as the price of steel doubles, we’re sure to come out ahead!”

“But what if they can’t deliver? That would be a catastrophic disaster for Sheffield Steel. The losses wouldn’t be limited to just their commercial reputation—they’d face immeasurable financial losses, and bankruptcy would be almost inevitable!”

Upon hearing Li Yi’s words, Li Futao fell silent immediately, then began to carefully consider Li Yi’s plan.

It is very common in the industry for large steel companies to short steel in order to lock in profits in advance.

In fact, this practice isn’t limited to steel; it applies to all eight major metals traded on the London Metal Exchange.

The principle behind this is actually quite simple: if a company believes that current product prices are already at a high level and that prices are unlikely to exceed the current level within the next production cycle, it will sell products that have not yet been produced at the current price in advance, with delivery to be made upon maturity.

This effectively locks in the product’s profit margin, so even if the product’s price drops in the future, it won’t affect the company’s profitability.

Clearly, Li Yi believes that steel prices will rise significantly in the future, and by purchasing these contracts now, he stands to make a substantial profit later on.

Li Futao understood this strategy and was generally in favor of it.

However, from the sound of it, the purpose of going long on steel this time is not merely to make money, but also to teach the Sassoon family a lesson.

This makes the situation a bit tricky to manage. Unless Sheffield really fails to fulfill the contract, the aftermath could be quite messy.

More importantly, this is the foreigners’ home turf, and Sheffield United Steel is a well-known local enterprise. The local government would certainly not stand idly by and watch them go bankrupt.

So, no matter how you look at it, Li Yi’s plan is unlikely to succeed!

“Brother Li Yi, how confident are you in this?”

Li Yi replied confidently, “At least eighty percent!”

Li Fu’s expression froze slightly. He knew Li Yi was a modest man who tended to be understated in his speech.

If he said he was 80% confident, that meant at least 80%, or even 100%!

Li Fuzhao had actually guessed correctly on this point; Li Yi truly had absolute confidence in this plan.

He was very familiar with the situation at Sheffield Steel. In his previous life, Li Yi had almost acquired the company, though that was back in the 1990s.

Prior to this, Li Yi had conducted a thorough analysis of the company’s situation.

According to his findings, the company’s production capacity ranked among the top three in all of Europe, but due to persistently low steel prices in recent years, its profitability had suffered.

More importantly, steel prices were set to rebound significantly this year, and most struggling steel companies were seizing this opportunity to emerge from their crises.

Sheffield Steel, however, was an exception. Because they had been cutting steelworkers’ wages, an unprecedented large-scale strike broke out at the very moment steel prices were rebounding, leaving the company shut down for a full month and a half.

This directly resulted in the reissuance of expired contracts, causing substantial financial losses and sowing the seeds for the company’s subsequent operational difficulties.

In his previous life, the company ultimately weathered this crisis, though it was left barely clinging to life.

What Li Yi is doing now is to exacerbate the crisis and completely destroy the company, thereby sending a message to the foreign capitalists behind it.

“Since you’re so confident in your plan, go ahead and do it. I’ll pass your plan on to Yunbao and the others!” Li Fu said.

“Alright, Old Li, tell Yunbao to keep things as discreet as possible when they act. Don’t alert Sheffield Company just yet!”

After all, the Falklands War wouldn’t break out for some time yet. During this period, they absolutely couldn’t expose their target; otherwise, if they drew the attention of other companies, it would be much harder to take advantage of the chaos.

“Alright…”

……….