Such disputes are becoming painfully common in the industry responsible for ferrying food, fuel and metals around the world. Last year traders stopped supplying a Chinese metals merchant after $500m-worth of copper went. In February Trafigura, a trading giant, booked $600m in losses after discovering that cargoes of nickel it had bought were in fact worthless stones. Last month the London Metals Exchange found bags of stone instead of nickel at one of its warehouses.
Lately there have been wild swings aplenty. In April 2020, as lockdowns sapped demand for energy, the collapse of Hin Leong, a Singapore-based oil trader accused of fraud, left 23 banks on the hook for $3.9bn. Last year Maike used its pricey copper to raise funds to bet on Chinese property—shortly before zero-covid policies and debt rationing strangled the sector. Rising prices for fuels and metals seem to have made trickery all the more appealing.
Yet instead of retreating, most big banks have refocused on the larger traders. Trafigura, which borrows from some 140 banks, increased its credit lines by $7bn to $73bn last year. Meanwhile, smaller firms in countries for which commodities trading is bread-and-butter, such as Switzerland, where the industry employs 10,000 people, can still find enough working capital to go on, notes Jean-François Lambert, an industry consultant. Singapore’s three main banks remain active lenders, too.