A leading Chinese commodity trader embroiled in the collapse of Jiangsu Delong Nickel Industry Co, Ltd has won credit backing from banks, worth over US$6 billion . 

Xiamen Xiangyu Co, Ltd and its state-owned parent have reached deals with three Chinese lenders in the past two weeks, to secure a total of 46 billion yuan (US$6.4 billion). The funding comes after Delong’s failure raised concerns over the extent of Xiangyu’s exposure to one of its biggest clients.

Xiangyu, a listed raw materials merchant with revenue of more than US$60 billion last year, signed a deal with policy lender China Development Bank in late July for 20 billion yuan, according to a statement from the company. The new credit line will help Xiangyu expand in countries tied to China’s Belt and Road initiative, the company said.

Parent Xiamen Xiangyu Group Corp also inked agreements with Export-Import Bank of China and Xiamen International Bank Co, Ltd for a combined 26 billion yuan earlier this month, according to two other statements that cited “strategic cooperation” as motivation for the deals.

Xiangyu’s shares slumped last month, in response to legal moves by one of Delong’s creditors to restructure the steelmaker. The stock has stabilised after Xiangyu’s parent said it would cover any liabilities arising from Delong’s collapse. Delong was Xiangyu’s largest metals customer in 2023, with trades valued at 7.1 billion yuan. 

The fate of Delong - established and owned by legendary metals entrepreneur Dai Guofang and his family - is being closely watched due to the firm’s extensive networks in China and Indonesia. It’s also a test of bankers’ resolve to contain the impact of China’s slowing economy on suppliers and customers caught up in company failures.    

A local court in Jiangsu province has accepted the claim to restructure Delong and three related companies, according to an exchange filing last week from creditor China First Heavy Industries Co, Ltd, which jointly owns an Indonesian nickel producer with Dai’s firm.

  - Bloomberg