One Of China's Biggest Commodity Traders Goes Missing 

He Jinbi, the founder and chairman of Maike Metals International, one of China's top commodities traders, has reportedly gone missing in recent days and is suspected to be in police custody, as reported by Bloomberg, citing sources close to the situation. 

Colleagues have not heard from Jinbi for several days. The people indicated that Jinbi "was escorted by police for questioning in his home province of Shaanxi." The reasons for Jinbi's detention were not immediately known to the people. 

Over the past year, Maike, based in Xi'an in Shaanxi province, and Jinbi have faced legal scrutiny by creditors, especially after the firm experienced severe challenges paying for imported copper. The company, responsible for a quarter of China's copper imports, was crushed by repeated Coivd lockdowns last year and, a deepening property market collapse and ongoing economic slump. 

Maike's troubles outline how one of China's biggest commodity trading houses has stumbled into a crisis as the multi-decade commodity supercycle for raw materials falters in the world's second-largest economy. Also, banks have increasingly grown cautious toward the commodity sector, adding further pressure on Maike's ability to raise additional capital. 

In an interview last fall, Jinbi told the Financial Times, "We're actively selling assets and equities to replenish our liquidity and reduce debt." He said Maike was "breaking arms to survive," an expression that means sacrificing parts of the business to save it from bankruptcy.

"The entire private sector has encountered a lot of liquidity difficulties, and we are no exception," he said. "Now it's all about the survival of the fittest."

In February, Maike filed a request to a court for "preliminary restructuring" as it aimed to restart copper trading operations. Bloomberg noted Maike's "continued absence from the market has weighed on liquidity in China's copper trade." 

We noted in April, "And when Maike Metals International ran into trouble later last year, JPMorgan was left with around 30,000 tons of copper it had been financing for the trading company in Shanghai. In the end, the bank was able to sell the metal without major losses, the people said, but the episode highlighted the risks of trading in China's base metals industry. Maike has since filed a request for a court-led restructuring." 

By July, ING Groep NV in Hong Kong sued Jinbi for $147 million in unpaid debt. The combination of Maike's short-term obligations and illiquid property portfolio makes it very hard for the trading firm to raise additional capital. 

Mystery still revolves around why Jinbi was taken into custody by police.