Chinese metals giant Tsingshan is reportedly seeking replacements for reduced lending by JPMorgan in the aftermath of the nickel fiasco on the London Metal Exchange.
Tsingshan has approached at least two London Metal Exchange (LME) brokers to become a client or increase credit lines, according to a «Reuters» report citing unnamed sources.
The move was in response to JPMorgan’s decision to reduce credit to Tsingshan alongside other customers in Europe and Asia following a risk review. The customers have either already had their credit lines shrunken or received notice that such an event will occur by the end of the year.
Nickel Fiasco
In March, nickel prices on the LME more than doubled in a matter of hours and the British bourse halted the market and cancelled trades – an unpopular move that has led to widespread backlash including legal action by fund manager Elliot Associates and US investment firm Jane Street Global Trading.
At the center of the crisis was Tsingshan – one of the world’s largest nickel producers owned by Chinese entrepreneur Xiang «Big Shot» Guangda – which was the largest holder of short positions with a reported paper loss of $8 billion at one point.
JPMorgan held the largest exposure to Tsingshan’s short positions amongst 10 banks and brokers and made a $120 million provision in April for a related loss.
