Stranded copper of China’s cash-strapped Maike sold – sources


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BEIJING/HANOI — JPMorgan Chase & Co last month sold more than 30,000 tonnes of refined copper booked by cash-strapped Maike Group that had been stranded in warehouses, two people with direct knowledge of the matter said.

The domestic sale, equal to 10% of China’s monthly refined copper imports, relieved some pressure on tight supplies in the world’s biggest copper-consuming country and eased some concerns about liquidity problems across the supply chain.

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But Maike is still struggling to resume its business after major miners halted trade with the company when it was unable to pay its lenders, and questions remain about how its absence from the market will affect global copper trade.

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The copper sold in late September had been in bonded warehouses after the firm ran short of cash. It is worth more than $227 million based on last month’s average benchmark prices on the London Metal Exchange (LME), according to Reuters calculations.

It was unclear who received the proceeds of the sale or who bought the copper.

“We consigned the sale, all was handled in a regular way,” a source at Maike told Reuters, asking not to be identified because of the sensitivity of the matter.

A manager at a trading firm that was offered the metal by JPMorgan at a discount to market prices confirmed the volumes amounted to more than 30,000 tonnes.

The bank did not respond to Reuters request for comment.

Maike, which imports around 1 million tonnes of copper annually, said in August it was facing a liquidity crunch after COVID-19 lockdowns hampered its ability to generate income and repay loans.

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China’s copper supply has been tight as domestic output fell short of expectations for the past two months, exacerbated by disruptions from Maike’s cashflow difficulties and improving demand, analysts said.

Inventories in Chinese bonded warehouses and Shanghai Futures Exchange warehouses together were at a record low at the end of September, equal to just over two days of Chinese consumption of the metal, data from the exchange and consultancy SMM show .

It was not clear whether more copper ordered by Maike was still in bonded warehouses.

The Financial Times reported on Sept. 27 that ICBC Standard Bank Plc was moving some copper stocks that were collateral for its lending to Maike outside China. The Maike source said none of the company’s metal had been delivered to LME warehouses.

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The bank declined to comment.

Chile’s Codelco, the world’s biggest copper miner, told Reuters that sales to Maike had stopped and it had no pending commitments with the firm.

Anglo American has also halted trade with Maike, said a source at the company who asked not to be identified due to the sensitivity of the matter. An Anglo American spokeswoman said the company does not comment on commercial operations.

Australia’s BHP Group has paused sales to Maike as a result of its cash issues, Bloomberg reported in August. BHP did not respond to a request for comment.

Two copper buyers in China said they were now buying more directly from miners in the absence of supply from Maike.

He Jinbi, Maike Group’s chairman, told Reuters on Sept. 1 that the company was in talks with state-owned companies to sell assets to address its liquidity problems. (Reporting by Siyi Liu in Beijing and Mai Nguyen in Hanoi; Additional reporting by Peter Hobson in London and Fabian Cambero in Santiago; Editing by Dominique Patton and William Mallard)



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