One of China’s most influential commodities traders is seeking government aid to shore up its finances, in the latest sign of how a sagging economy is squeezing the country’s private sector.
He Jinbi, founder and chairman of Maike Metals International Ltd., has asked the government and financial institutions for help after liquidity issues forced his company to delay some payments for imported copper, he told Bloomberg News. BHP Group, the world’s biggest miner, is among suppliers that are diverting shipments away from Maike for now, according to people familiar with the matter.
He founded Maike nearly three decades ago trading copper wires, and he is one of the most well-known names in China’s copper industry. The commodities sector in China has been under stress this year as a deepening property crisis and regular Covid-19 outbreaks stifle demand. Private entrepreneurs have also borne the brunt of tighter credit.
Maike is suffering “temporary difficulties in logistics, transportation and product sales due to Covid flareups in China,” He said by phone. It has delayed payments on some cargoes, and some suppliers have canceled deliveries due to concerns over the company’s liquidity, He said.
The cash crunch has prompted BHP and Chile’s Codelco, the biggest global copper producer, to pause sales to Maike. BHP in Melbourne didn’t immediately respond to a request for comment. Santiago-based Codelco declined to comment.
The issues with Maike could lead to a temporary dip in imports to China, but the market should find a way to re-balance via other traders, Wood Mackenzie analyst Eleni Joannides said by email. Maike claims to import about 1 million tons a year of copper.
This instance of financial stress comes after growing caution around commodities financing in the wake of high-profile losses — especially in the nickel market — and huge price volatility fueled by Russia’s invasion of Ukraine. In China, several alleged scandals this year involving missing aluminum and copper ores have further reduced liquidity to the industry.
BHP halted the shipment of a 10,000-ton cargo of Chilean copper cathodes that was due for September delivery to Maike in China, according to two of the people familiar with the matter, who asked not to be identified discussing private information. Codelco has also diverted at least two cargoes and has temporarily stopped shipping to Maike, one person said.
The problems are only affecting 10,000 to 20,000 tons of refined copper, which accounts for a very small portion of the company’s supply, Maike’s chairman said.
Copper prices traded higher on Friday. The metal rose 1.4% to $8,239 a ton on the London Metal Exchange as of 5:48 p.m. in Shanghai.
Fastmarkets first reported Thursday that Maike was facing a liquidity crunch and was late in making payments for contracted copper deliveries from suppliers. The company has historically been one of the biggest traders of copper in China since growing rapidly during the commodities supercycle of the 2000s. It has remained a major player even with recent competition from newer state-backed rivals.
The trading house holds a substantial amount of the metal in Shanghai’s bonded zone, which is the center of refined copper trading in China. It acts as a gateway to the world’s top consumer of the metal, which is used to make cables that conduct electricity in everything from fridges to cars.
(With assistance from James Attwood, Liz Ng and Jason Rogers)