Chapter 824: Panic at Sheffield Company!

London City Center. Sheffield Steel Company Branch!

In the conference room, more than a dozen company executives were in a meeting.

When the exchange sent a notice stating that all margin deposits from the long side had been fully settled, they were required to immediately prepare for physical delivery in accordance with the rules.

Upon receiving the news, the executives of Sheffield United Steel Company panicked and immediately gathered to discuss a strategy.

“Sandy, it looks like we’re facing a short squeeze this time. The other side is well-prepared, and we have no way out!” said Wood, the company’s deputy general manager, with a sigh.

General Manager Sandy said with a grim expression, “If they want spot delivery, so be it. We can scrape together over 12 million tons of steel—if necessary, we’ll buy it on the open market at a premium!”

“But the most important thing right now is to settle things with those troublemakers at the company and resume production as soon as possible. Otherwise, even if we manage to resolve this squeeze, there’s no guarantee we’ll be able to avoid the next one!”

Another deputy general manager, Ward, frowned and said, “But the workers’ demands are too excessive. A 20% pay raise would place a massive burden on the company. If we agree to their terms, we won’t be able to justify it to the board.”

“Besides, you know that this year’s rise in steel prices is due to the war. Once the war ends, prices are bound to drop, but once wages go up, they’re hard to bring back down.”

Sandy paused briefly before saying, “This strike has already cost us at least over a million tons of steel production. If we don’t resume production as soon as possible, the consequences will be unimaginable.”

“I think we should bring this up for discussion at the board meeting. Otherwise, I’m worried the shareholders might have objections!” said Wood.

“I agree that it’s best to bring this to the board,” Ward chimed in.

Sandy sighed and said, “Those board members are all about money and bickering—not a single one of them gets anything done. If this goes to the board, it won’t be resolved for at least a week.”

“Sandy, we all understand what you mean. But once the board discusses it, whatever happens will be a collective decision—and no one will be held accountable if something goes wrong later…”

Wood didn’t finish his sentence, but Sandy understood—he was protecting himself and the company’s top brass.

After a long pause, Sandy finally said, “Let’s put the resumption of production on hold for now. We need to focus on resolving the short squeeze first!”

Wood immediately replied, “I checked with the factory this afternoon. The company still has at least 7 million tons of steel in stock, and the current shortfall is just under 6 million tons. My suggestion is to immediately purchase steel from the market!”

“Alright, Ward, the sales department is under your command. I’m putting you in charge of this. No matter what, you must secure 6 million tons of steel within three days!” Sandy said in a stern voice.

“Yes, sir!”

“Ward, we have a batch of contracts expiring in early June. Find out who holds these short positions, contact them as soon as possible, and do your best to redeem these contracts!” Sandy said gravely.

“Alright, I’ll contact Mr. Shilidan at the exchange right away!” Ward replied.

“Go ahead!”

Sandy then turned to his secretary and said, “Alice, notify the board members immediately. They are to report to the company for a board meeting tomorrow morning. No one is to take a day off!”

“Yes, sir!”

After issuing the orders, Sandy announced the meeting was adjourned.

Once everyone had left, Sandy sat alone on the sofa, his face clouded with worry.

As the company’s leader and a seasoned business executive, he could already sense a looming crisis.

Over the past two months, the company had sold off a total of 1.3 million short contracts, amounting to 3,250 tons of steel—equivalent to nearly two years’ worth of their production!

They weren’t unaware of the risks involved, but they had always believed they had everything under control—after all, their company was the largest steel supplier on the London Metal Exchange, and the exchange was essentially in cahoots with them.

Over the years, they had consistently manipulated steel prices on the exchange; it was simply impossible for them to lose money.

Most importantly, Sandy’s older brother served as a high-ranking commander in the Imperial Army—the commander of an entire fleet.

Before the war began, her brother had analyzed the situation for her, concluding that the Empire was certain to win and that it wouldn’t take long.

Therefore, Sandy was well aware that the current steel prices were merely temporarily inflated; once the war ended, prices would inevitably fall.

That’s why they planned to sell more short positions while prices were high to lock in as much profit as possible. Even if there wasn’t enough physical delivery later, they could still make a killing by buying back their short positions at the high prices.

But he never expected to face a short squeeze by the bulls in late May—this was a real problem.

His only hope now is that the remaining short positions aren’t held by the very people behind this squeeze; otherwise, he’s in deep trouble.

But Sandy isn’t Chinese, so he’s never heard the saying, “Good luck never comes, but bad luck always does!”

Besides, he didn’t know his opponent. If he’d known Li Yi beforehand and understood his investment style, he wouldn’t have been so complacent…

……….

Over the next two days, Sheffield Steel began frantically buying up all available steel on the market.

But to their horror, they discovered that steel was in extremely short supply on the market.

Even the major retailers and building material suppliers had very little steel left in stock at this point.

After two days of scrambling, they had managed to acquire only 1.2 million tons—a shortfall of over 5 million tons from the 12.8 million tons required for delivery.

More importantly, the price of spot steel had risen much more sharply than futures prices, with the price per ton approaching £330—more than ten pounds higher than the futures price per ton.

This discovery left Sheffield Company stunned. They had previously noticed significant volatility in spot steel prices but had assumed it was a natural rise influenced by the futures market, so they hadn’t paid it much attention.

After all, the company’s primary business had shifted to the futures market, and with substantial spot inventories in the market, they believed this would have no impact on the futures market.

But now they’ve discovered that someone in the market is hoarding massive amounts of spot steel.

To have that much money and not invest it in the stock or futures markets, but instead invest in spot steel—that person must either be out of their mind or have an ulterior motive.

It’s certainly not a case of insanity; the only plausible explanation is that the other party has ulterior motives—and those motives likely involve forcing the steel company into a corner.

If they succeed in forcing a delivery, the consequences for their company would be catastrophic.

At that point, the exchange will have to buy back the contracts held by the long positions at market prices, and the steel company will be responsible for covering those costs—the contract holders will suffer no losses.

Furthermore, the exchange will require them, as the short sellers, to pay hefty fines and penalties, typically amounting to 15%–30% of the total value of the goods to be delivered.

Given their company’s situation, if all 30 million-plus tons of short positions were required to be physically settled, it would be impossible to gather that much cargo in such a short time, making default almost inevitable.

Moreover, at market prices, the total value of these contracts exceeds 12 billion pounds.

Using this as the basis for penalties, the maximum fine could reach 3 billion pounds.

It was easy to imagine that, hit with this combination of blows, their company would inevitably go bankrupt.

Realizing the gravity of the situation, Sandy and his colleagues panicked completely. No longer concerned with saving face, they immediately made distress calls to the company’s major shareholders.

It was only then that the major conglomerates, including the Sassoon family, realized that Sheffield United Steel had quietly caused them such a massive disaster.

Although each of them was so furious they wanted to skin Sandy, Wood, and the others alive, that was a matter for later; for now, they had no choice but to find a way to help them resolve the crisis.

Subsequently, members of the Sassoon family began leveraging their connections to buy up steel stocks everywhere, even going so far as to ship spot cargo from the European mainland.

At the same time, they dispatched senior family members to negotiate with the contracting party.

As one of the family’s key heirs being groomed for succession, and since he happened to be in London at the time, this crucial task naturally fell to him…

……….