China Construction Bank (CCB) is making a move to become a top-tier trader on the London Metal Exchange.
China’s second-largest lender by assets is in talks to buy British-firm Metdist Trading, two metal industry sources told Reuters. Metdist Trading is a so-called Category One trader, which would give CCB access to the LME’s open outcry, electronic and telephone trading, said Reuters.
CCB appears to be reaching for a top-tier presence despite a slowing Chinese economy that’s undercutting demand for commodities worldwide.
“China Construction Bank has been in talks to take over Metdist’s metals trading business for a few months now,” one source told Reuters.
The second source said the deal might be finalized next week when China’s President Xi Jinping visits London. No further details on the deal were available. Both state-owned CCB and Metdist declined to comment
The 138-year-old LME, the world’s oldest and largest market for industrial metals trading, sets global benchmark prices for industrial metals, such as copper, aluminum and zinc. The exchange was bought by Hong Kong Exchanges and Clearing in 2012.
If successful, CCB will join a growing list of Chinese entities gaining entry to the LME. China is the largest consumer of many commodities, and accounts for nearly half of global copper demand.
Other Chinese firms on the LME include Bank of China International, China Merchants Securities, ICBC, which has a majority stake in Standard Bank; and GF Financial Markets, part of GF Securities, one of China’s largest brokerages. However, they are classified as Category 2 traders, which means they don’t have access to the trading pit.
The privately owned Metdist had an operating loss of $758,726 in fiscal 2014. Still, it did carry forward $6.2 million in profits.