Chinese nickel giant Tsingshan secures lifelines from lenders including JPMorgan and China Construction Bank after short on metal goes wrong

Tsingshan Holding Group, which faces billions of dollars in potential losses on short positions in nickel futures, won credit promises from banks including JPMorgan Chase and China Construction Bank in meetings that ran into the predawn hours of Wednesday morning, the people said, asking not to be named since the matter is private. Some of the terms, such as how much extra collateral Tsingshan needs to pledge, are still under discussion, the people said.

Chinese authorities directed Tsingshan’s domestic banks to offer more credit lines to the company, two of the people said. A majority of these new loans will be used for margin calls on its existing positions on the London Metal Exchange (LME), the people said.

The bank loans are expected to help Tsingshan address its immediate liquidity squeeze. With large nickel production facilities in Indonesia and China, coupled with surging prices and strong demand, the firm’s owner, Xiang Guangda, told bankers at the meetings that he is confident his company can meet its obligations, according to the people. He is also reviewing his hedging strategy and is considering exiting the bets against nickel, one of the people said.