Behind one of China's biggest industrial companies is a couple who have reinvented the way stainless steel is made.

With cheaper production technology, xiang and his wife, he xiuqin, helped transform the industry in less than 20 years, turning aoyama holding group into a company that produced one-fifth of the world's stainless steel, creating a fortune of $1 billion. Now it is making waves in a different market: the London metal exchange.

Although aoyama and the couple keep a low profile, they are the subject of a week at the London metal exchange, with traders speculating about the company's role in extracting large amounts of metal from warehouses tracked by the LME. Aoyama, which is privately held, said it needed the material to feed its Chinese factories when Indonesia stopped exporting nickel ore in January.

Malcolm Freeman, director of Kingdom Futures, said in an email after the LME's annual dinner that "there are more conspiracy theories about the nickel market than there are people attending."

In the space of two months, more than half of the nickel in the exchange network, a last resort designed for traders and hedgers, has been withdrawn. Aoyama is said to be a key factor driving down inventories. Inventories are at their lowest level in 11 years and nickel prices are up 56 per cent this year.

Other indicators suggest the spot market is well supplied. LME nickel prices, for example, have now surpassed China's for the first time since 2015. China is the world's largest consumer of nickel.

The London metal exchange last month began a review of trading in nickel, asking members to provide more details of "significant client activity". A person familiar with the matter, who asked not to be named, said the exchange could launch a formal investigation into the issue if it found evidence of any rule violations. No one has been charged with any wrongdoing.

Both xiang and he declined to be interviewed, but aoyama did provide a written response. Mr. Xiang is the chairman and is a director and largest shareholder of Golden Harbour International Pte., a Singapore subsidiary of the company. Aoyama is not a member of the LME.

They shot to fame in the late 1980s when they opened a company in the eastern city of wenzhou that made frames for car doors and Windows. In 1992, they began producing stainless steel, an alloy of metals such as iron, chromium and nickel. With the rapid development of China's economy, this business is growing rapidly. In 1998, the company was named qingshan, which means "green mountain".

"The company was focused from the beginning on reducing production costs," said Celia Wang, a former Qingdao employee who is now an analyst with Grand Flow Resources Co. in Shanghai. "Castle peak has made a great contribution to making stainless steel products affordable for more ordinary people."

Aoshan is believed to have pioneered the large-scale use of nickel pig-iron to produce stainless steel. Nickel pig iron is a semi-refined product and a low-cost alternative to pure nickel. The main innovation is the rotary kiln, which allows the ore to be processed, smelted and transported to a stainless steel furnace in a continuous heat flow.

Another driver of the company's success was its decision to invest in Indonesia in the first decade of the 21st century. At the time, the country's nickel reserves were unproven, a risky move. Today, Indonesia is the world's largest producer of nickel, and aoyama runs a nickel pig iron plant and a stainless steel complex on the island of sulawesi. By building efficient factories near nickel mines, they have brought costs down to levels even lower than in China.

In July, Indonesian President Joko Widodo met with xiang and other Chinese executives at the presidential palace. According to a company press release, xiang made "several policy recommendations" to improve the business environment in Indonesia and briefed the group on plans to increase aoyama's total investment in Indonesia to $15 billion, including a plant to make nickel chemicals for batteries used in electric cars. Two months later, Indonesia announced it would bring forward the ban on nickel exports by two years.

"Aoyama stands out for its audacity and vision," said Jim Lennon, managing director of Red Door Research Ltd., a nickel city veteran. "They were a small manufacturer in wenzhou in the first decade of the 21st century and then they suddenly took off, thanks in large part to the leadership of the chairman and his vision." (From CCMN)