London 20/07/2016 - J Aron & Company, the commodities division of Goldman Sachs, will gradually scale back its base metal business in China, several sources with direct knowledge of the matter told FastMarkets.
J Aron will continue to fulfil its long-term contracts commitment for this year but will not accept new business, those sources claimed. Its main trader will leave the company in August while its commodities sales representative has relocated to Singapore, they added.
But a Goldman Sachs press officer denied claims that J Aron will exit the base metal industry in China completely and said the onshore business will not be closed.
"The trading book is not very big in terms of volumes so it will not have a big impact on Goldman," a well-informed source said.
Its main business is aluminium and copper in the Shanghai branch. Its Singapore division will handle the unwinding of remaining trading positions in Shanghai, sources said.
"[The move] is also in line with its intention to cut costs and scale back from non-core business," a second trading source said.
Market conditions have become tougher - base metal prices have sunk to their lowest for several years in 2016 in some cases and margins have narrowed for base metal traders in general.
Goldman Sachs bought coffee and gold commodity broker J Aron in 1981. Current CEO Lloyd Blankfein previously worked at J Aron as a precious metals salesman in its London office.
(Editing by Mark Shaw)