China's Metals Traders Face $144 Million Loss as Counterparty Flees

• Chinese metals traders have incurred losses of at least 1 billion yuan ($144 million) after a counterparty, Xu Maohua, known as "The Hat," fled the country.
• The crisis centers on a trading network facilitated by Xu, with state-backed SDIC Commodities Co. identified as a prominent participant.
• Xu allegedly owed money for copper and other metals, leading to SDIC Commodities owing its suppliers and facing a lawsuit for over 200 million yuan.
• Regulators are concerned about hidden financial risks and circular trading, where companies buy and sell the same asset to inflate revenue.
• The incident has prompted China's state-owned assets watchdog to order major commodities trading companies to review operations and eliminate superfluous activities.

Why It Matters: Chinese metals traders lost $144 million due to a fleeing counterparty, exposing financial risks and prompting regulatory action.