Chapter 826: Sheffield Company Collapses!

Ever since learning that Li Yi was the one behind the short squeeze, both Sheffield Company and the Sassoon family behind it realized negotiations were hopeless and immediately began preparing for physical delivery.

The Sassoon family’s influence in Europe was indeed formidable. After mobilizing extensive connections, they finally managed to secure the 12.8 million tons of steel required for delivery by May 29.

However, just one day after the two sides completed their first physical delivery, good news arrived from the front lines.

After clearing Argentine naval vessels from around the Falkland Islands and blockading the surrounding waters, the Royal Navy landed on the beaches of San Carlos, on the northern coast of East Falkland, on the evening of the 21st.

After 4,000 soldiers from the 3rd Marine Brigade and the 2nd and 3rd Battalions of the Airborne Corps successfully landed, they immediately launched an attack on Darwin and Goose Green under the command of Brigadier General Thompson.

After several days of fierce fighting, the frontline troops finally captured these two strategic strongholds. The battle resulted in the deaths of 55 Argentine soldiers and the capture of 1,050, marking a major victory in the land campaign.

After taking Gousgrin, the troops were finally able to advance toward the bridgehead at San Carlos, signaling that the war had entered its final, critical phase.

Upon hearing the news, the entire British Isles instantly erupted in celebration.

The crowds that had been protesting and demonstrating every day seemed to have forgotten the events of just a few days prior; the demonstrations instantly turned into victory parades!

The entire British Isles were swept up in a frenzy of celebration!

In stark contrast, the mood in the stock and futures markets was far from optimistic.

On the very day the news broke, price increases for nearly all metals on the exchange halted, and prices began to fall.

Copper suffered the steepest drop, falling by £75 per ton in a single day.

Steel fared slightly better; yesterday’s closing price was still £322 per ton, but today’s closing price dropped directly to £308, a decline of £14 per ton.

And this seemed to be just the beginning; over the next two days, good news from the front lines kept coming, with the troops advancing at a pace that exceeded the public’s imagination.

Even the female Prime Minister at 10 Downing Street publicly stated that, given the pace of the frontline troops’ advance, the valiant Imperial Army would be able to completely subdue the Falkland Islands by mid-June at the latest.

The war could be over by the end of June!

Reported by the media, this news spread across the British Isles in no time, pouring cold water on all the investors who had previously been speculating on metals.

After two and a half months of wild surges, the London stock and futures markets plunged into a freefall, with metal prices plummeting across the board and panic gripping the entire market.

Witnessing this, Sheffield Company and the Sassoon family—who had been pushed to the brink—finally breathed a sigh of relief.

With steel prices plummeting, the pressure on them eased significantly, while it was now Li Yi and his fellow long positions who had reason to worry.

In response, Dolsen even personally called Li Yi to mock him for missing the optimal opportunity to liquidate his positions.

He also offered to buy back Li Yi’s remaining short contracts at 80% of the current market price, if Li Yi was willing.

Li Yi’s reply to Dolsen consisted of a single word: “Get lost!”

After firing back at Dolsen, Li Yi once again embarked on his high-stakes maneuvers…

……….

Wednesday, June 2!

Just as Dolsen and the Sassoon family thought the crisis was about to pass, London’s top ten newspapers simultaneously published a report that once again thrust Sheffield Steel into the spotlight.

The report was an investigative piece on Sheffield Steel by a very well-known London journalist.

According to the report, since March of this year, workers at Sheffield Steel’s production facilities had been fighting the company for a pay raise. For nearly three months, the entire facility had been paralyzed, failing to produce a single pound of steel.

In stark contrast, Sheffield Steel’s revenue has been soaring, reaching a staggering 2.9 billion pounds by the end of March.

The investigative reporter then revealed the answer: all of Sheffield Steel’s revenue was derived from massive short selling on the futures market.

Meanwhile, according to this investigative report, over the past three years, Sheffield Steel has shut down multiple blast furnaces, leaving its production capacity at only about half of what it was at its peak.

If one were to compare the company’s current production capacity with the volume of short positions it had sold, it would take the entire company three years of full-scale production to fulfill those contracts—and even then, completion is far from guaranteed.

Consequently, at the end of the report, the journalist warned investors that Sheffield Steel faced a significant risk of default and urged them to exercise extreme caution when considering an investment in the company!

The news spread like wildfire throughout London in a very short time, with everyone speculating about the report’s veracity.

Although Sheffield Steel immediately stepped forward to deny the claims, a flood of evidence soon emerged, and the issues the company had been trying to cover up were being exposed bit by bit.

But that wasn’t the end of it. On June 3, the media broke another unexpected story: according to an insider in the futures market, Sheffield Steel had been manipulating steel prices over the past few years to fleece investors in the futures market.

The source provided a thorough expose, clearly detailing the methods and timing of Sheffield Steel’s price manipulation—effectively delivering a decisive blow to the company.

As soon as the news broke, the entire British Isles were in an uproar. Isn’t this treating investors like fools?

They make steel prices rise whenever they want and fall whenever they want—it’s like being both the player and the referee. Who stands a chance against them?

Just think about it: a steel company that cuts production every year yet sees its profits rise year after year. Where does all that money come from?

Isn’t it all being fleeced from these gullible investors? Realizing this, individual investors, institutions, and conglomerates who had lost money in the steel futures market were furious!

Soon, Sheffield Steel became the target of public outrage, and even the exchange found itself in the hot seat!

After all, without the exchange’s complicity, how could a single steel company pull off such a seamless scheme?

By this point, many had realized that the empire’s largest steel producer was likely on the verge of collapse.

The conglomerates and institutions holding steel futures contracts acted in perfect unison to halt their attempts to cash out and exit the market. Immediately afterward, a massive wave of buy orders for steel futures contracts flooded the market once again.

The futures market differs from the stock market. In the stock market, if a company faces a crisis, investors would rather cut their losses and flee.

But the futures market is different. It’s important to understand that neither long nor short positions trade directly with each other; their counterparties are not one another, but the exchange.

Therefore, regardless of which side defaults, they do not seek each other out; their first point of contact is always the exchange.

Consequently, even if Sheffield Steel were to go bankrupt, the short sellers would not lose their entire investment.

On the contrary, if the short squeeze on Sheffield Steel is successful, the exchange must purchase the corresponding amount of steel from the market to deliver to the long positions.

If there isn’t enough eligible physical steel available, the exchange would have to compensate the long positions at market prices.

As for how the exchange subsequently holds the defaulting short sellers accountable, that has nothing to do with the long positions.

What the longs need to do now is drive up steel prices as quickly as possible, so they are in a favorable position when the squeeze succeeds.

Subsequently, through the collective efforts of the long positions, the price of steel on the London futures market—which had already fallen to £278 per ton—was driven up to £338 in less than two days, a jump of a full £60 per ton.

And just then, the second batch of futures contracts held by Li Yi expired…

………