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Some of the world’s biggest banks worked over the weekend to resolve a crisis in the nickel market that leaves them on the hook for billions of dollars owed by a Chinese metals giant.
JPMorgan Chase & Co.
JPM,
Standard Chartered PLC
STAN,
and BNP Paribas SA
BNP,
were among the banks and brokers seeking to reach an agreement with Tsingshan Holding Group, people familiar with the discussions said. Trades placed by the Chinese steel and nickel producer on the London Metal Exchange contributed to an uncontrollable rise in prices that led the exchange to halt trading and cancel eight hours’ worth of transactions last Tuesday.
Nickel, a cog in the world economy for its use in stainless steel and electric-vehicle batteries, hasn’t traded since.
The meltdown bled into the financial system, leaving Tsingshan’s banks and brokers with several billion dollars in unpaid margin, the upfront cash brokers require to make trades, some of the people familiar with the discussions said.
The talks between Tsingshan’s creditors, led by JPMorgan, have focused on extending the Chinese company credit lines so that it can pay them the margin it owes, some of the people familiar with the discussions said. One plan under discussion was to secure this lending against Tsingshan’s steel and nickel assets in China and Indonesia, some of the people said.
An expanded version of this report appears on WSJ.com.
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