JPMorgan Chase received a bag filled with stones instead of the nickel it ordered from the warehouse in Rotterdam.
Last week, the London Metal Exchange (LME) announced the cancellation of nine nickel contracts – valued at approximately 1.3 million USD – after “irregularities” were discovered in a Rotterdam warehouse.
The irregularity was that JPMorgan Chase received a bag filled with stones instead of the nickel it ordered from the Rotterdam warehouse, which was reportedly owned by Access World.
It is unclear whether the mix-up is due to an accident, theft, or fraud, but it is claimed that the material was already inside the warehouse when it was purchased by JPMorgan several years ago.
Access World began an investigation of warehouse materials following the suspension of the nine contracts, but believe that the incident was “an isolated case and specific to one warehouse in Rotterdam”.
Traders of physical metals such as nickel are typically insured against cases of theft, but the news has caused chaos for warehouses as they scramble to weigh and inspect all nickel at the LME’s request.
The price of nickel surged in 2022 amid increased demand for the metal in the manufacturing of electric vehicle batteries and widespread economic sanctions against Russia, a major producer of nickel.
This far from the first case of commodity fraud involving metals.
In November of 2022, trading giant Trafigura received various quantities of steel and iron instead of the nickel they had purchased.
In 2021, Swiss trader Mercuria Energy ordered $36 million worth of copper and received spray-painted rocks instead.
In fact, these cases aren’t even unique to the modern era.
A clay tablet dating back to c. 1750 BCE features a lengthy complaint written by a man named Nanni who purchased copper ingots from a merchant named Ea-nasir.
Nanni complained of the substandard quality of the copper and that Ea-nasir treated his servant rudely.
The tablet is on display at the British Museum and has become widely popular as an internet meme, largely because of how similarly the complaints of ancient civilisations mimic those of the modern day.
JPMorgan has declined to provide a comment on the mix-up at Rotterdam warehouse.
