One of the biggest banks in the US, JPMorgan Chase, recently grabbed headlines for all the wrong reasons. The bank had bought 54 metric tons (54,000 lb) of what it thought was nickel, only to find out later that the large bags were actually filled with pebbles.

One of the top commodity markets in the world, the London Metal Exchange (LME), has canceled nickel contracts worth $1.3 million (Rs 10.74 crore) because of “irregularities” at a warehouse in Rotterdam, a port city in the Netherlands. Investigation found that the alleged “irregularities” were in fact bags of stones, not nickel, as first thought.

JPMorgan Chase was not at blame for the accident because they had previously acquired the batch several years prior, when the bags were still being kept in the warehouse. According to a Bloomberg article, a worker had weighed the rock packets thinking they were nickels. The bank would have had all the appropriate certifications to confirm the metal’s validity, so it’s unlikely that they knew the bags of nickel weren’t real. The LME or warehouse operators typically perform additional inspections on the materials that have been stored.

Since it is their duty to protect the metal stocks, Access World, the logistics company that owns and operates the Dutch warehouse, will probably be held accountable for the error. A spokeswoman for Access World stated that they were now inspecting warranted packages of nickel briquettes at all sites and would be working with outside surveyors to help.

Buyers frequently have faith in the LME as being legitimate even though it does not own the storage unit. The LME, which is regarded as the gold standard in the metal trading industry, suffered a setback when JPMorgan’s bags of nickel were canceled. The value of LME contracts is very large in the metals market.

Since it is needed to make steel, turbine blades, boat propeller shafts, electric vehicle batteries, and even guitar strings, nickel has always been in high demand. The LME was hurt by this incident, but it had little effect on the metal markets.

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