JP Morgan Chase & Co. has struck a deal to sell its physical assets and trading arm to Swiss trader Mercuria Energy Group Ltd. for $3.5 billion in cash. JP Morgan Chase was one of many banks that bet heavily on physical commodities futures contracts such as aluminum.

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The deal, expected to be completed in the third quarter, marks the largest ever acquisition by Mercuria, the Wall Street Journal reported, a closely-held company founded in 2004 by Swiss traders Marco Dunand and Daniel Jaeggi that is relatively unknown outside the physical commodities trading industry.

Banks that had a hand in ownership of both physical commodities and the warehouses they were stored in were a source of complaints by both aluminum producers and buyers in recent months.

The cash price of primary aluminum weakened by 1.1 percent on the LME, settling at $1,684 per metric ton. The aluminum 3-month price saw a 1 percent decline on the LME to $1,728 per metric ton. The day’s biggest mover on the LME was the cash price of primary Indian aluminum which dropped by 2.6 percent on Tuesday.

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Chinese aluminum closed mixed yesterday. The Chinese aluminum cash price fell 0.8 percent to a 30-day low on Tuesday. The price of Chinese aluminum scrap was unchanged. The price of Chinese aluminum billet continues hovering in a short range or the fifth day in a row. For the fifth consecutive day, the price of Chinese aluminum bar held flat.

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