JPMorgan Slashes Credit For China's Tsingshan, Other Metals Clients

JPMorgan Chase & Co. has reduced lending to China's Tsingshan, one of the world's top nickel producers, while also paring back credit to other customers in Europe and Asia after a review of risk, sources close to the situation said, Eric Onstad, Pratima Desai, and Peter Hobson reported for Reuters.

Photo Insert: In March, JPMorgan had the largest exposure of about 10 banks and brokers to large short positions, or bets on prices falling, held by Tsingshan.

Tsingshan Holding Group was at the center of a crisis on the London Metal Exchange (LME) in March when nickel prices more than doubled in a matter of hours, forcing the LME to halt trading and cancel billions of dollars in deals.

Tsingshan has approached at least two LME brokers to become a client or increase credit lines after JPMorgan's actions, two sources with knowledge of the matter said.

JPMorgan is one of the biggest banks in metals and its paring back of finance is sending a chill throughout the sector, two of the sources said.

The company has curtailed credit to several customers in Asia and Europe or given them notice that it will do so by the end of the year, said five sources, who declined to be named because they were not authorized to speak to the media.

In March, JPMorgan had the largest exposure of about 10 banks and brokers to large short positions, or bets on prices falling, held by Tsingshan. Those positions, much of them in over-the-counter (OTC) derivatives, were blamed for the wild spike in LME prices on March 8 that were already climbing in the wake of Russia's invasion of Ukraine.

Tsingshan’s short positions spurred billions of dollars of margin calls that threatened to push some banks and brokers into default.

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