JPMorgan Reaped $100 Million as China Squeezed Niche Nickel Market – by Alfred Cang, Jack Farchy and Mark Burton (Bloomberg News – March 11, 2020)

JPMorgan Chase & Co. made about $100 million trading nickel last year, according to people familiar with the situation, as it benefited from a price spike on the back of a Chinese-led supply squeeze.

The blowout year in nickel underscores JPMorgan’s growing dominance in a corner of the commodities markets that rivals have retreated. The bank has become the go-to financier for big deals in base metals, from the Chinese nickel purchases that sparked last year’s price surge, to hedging transactions for carmakers, which need the metal for electric-vehicle batteries. A spokesman for JPMorgan declined to comment.

Nickel, usually a niche market dominated by stainless steel mills, became the world’s hottest metal in 2019 when prices jumped by two-thirds in a matter of months.

At first, the moves were spurred by news of a looming ore-export ban in Indonesia. But prices really took off as top stainless steelmaker Tsingshan Holding Group Co. withdrew large amounts of nickel stocks on the London Metal Exchange, spurring worries about a supply squeeze.

JPMorgan was among the banks that helped finance the Chinese company’s purchases, Bloomberg reported at the time. While those transactions weren’t a major profit driver, separate positions connected to long-term hedging deals with automakers became lucrative for the bank as the market rallied, the people said.

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