London Metal Exchange: the hunt for clues to JPMorgan’s mystery nickel rocks begins with a kick
- LME last week reported some irregularities over US$2 million of nickel traded in nine contracts - now invalidated - that belong to JPMorgan
- Unlike aluminium and copper, which are kept in neat stacks in warehouses, most of the nickel in the LME is in the form of briquettes in bags
Over the past week, warehouse staff from Busan in South Korea to Genoa in Italy have rushed to check tens of thousands of two-ton bags of nickel – in some cases, by literally kicking them.
The LME advised warehouse operators to wear steel toe-capped boots for safety, one person who received the instructions said. The rule of thumb: If it hurts when you kick it, it’s probably nickel.
The mass inspection, which also included more carefully calibrated checks like weighing and scanning the bags, came after the LME last week announced it had discovered “irregularities” in nine nickel contracts. Bloomberg has reported that the contracts – now invalidated – belonged to JPMorgan Chase & Co. No other issues were found across the LME’s global network of warehouses, the exchange said on Thursday.
Attention will now turn to the question of how the bags of stones could have been bought and sold as nickel on the LME – long viewed by traders as the one place where they do not need to second-guess the contents of their cargoes.
