Chinese copper giant seeks help with liquidity issues

Chinese copper giant seeks help with liquidity issues

Maike is suffering “temporary difficulties in logistics, transportation and product sales due to COVID flare-ups in China,” Mr He said by phone.

It has delayed payments on some cargoes, and some suppliers have cancelled deliveries due to concerns over the company’s liquidity, Mr 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 fuelled 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 were 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.

Bloomberg

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