Copper, Aluminim and Iron Ore Missing From Qingdao Port

Reuters had coverage on missing copper and aluminum at the port of Qingdao. Reuters reports shipments stopped, but Chinese sources say they are continuing normally. ZeroHedge has coverage of how this related to Chinese shadow banking. China Scrambling After "Discovering" Thousands Of Tons Of Rehypothecated Copper, Aluminum Missing

Copper prices fell more than 5 cents on the news. This move down knocks out some chance for a bullish turn in the charts for industrial metals. The move lower takes copper down to its support level.

Chinese port stops metal shipments due to probe - trade sources

"It appears there is a discrepancy in metal that should be there and metal that is actually there," said another source at a warehouse company with operations at the port.

"We hear the discrepancy is 80,000 tonnes of aluminium and 20,000 tonnes of copper, but we hear that the volumes will actually be higher. It's either missing or it was never there - there have been triple issuing of documentation," he said.

While it might seem bullish that lots of metal is missing, it is not. The missing metal was used for financing schemes. Whatever metal actually exists could be sold into the market if banks seize collateral. If there's no collateral backing the loans and they go bad, the loss hits the bank's capital.

Reuters discusses copper and aluminum, but Chinese news says iron ore is involved as well: 青岛港查库存"排雷" 铁矿石、铝和铜暂停出港

On April 18, the CBRC (China Banking Regulatory Commission) ordered several provincial divisions to investigate iron ore financing. Qingdao carried out another investigation of its own this past weekend.

Here's Reuters back in April: China banking regulator urges probes on iron ore financing, futures slump

The probe, confirmed to Reuters by sources with direct knowledge of the matter, raised fears that the crackdown on commodities-backed financing could unleash a flood of iron ore sales from 100 million tonnes-plus of stocks sitting at Chinese ports, raising the prospect of a price slump.

A China Banking Regulatory Commission (CBRC) spokesman declined to comment.

In a document issued on April 18, the commission told local regulators and banks to start investigating iron ore financing and to submit detailed reports by April 30.

"Local offices must step up measures to manage risks arising from commodities trade financing and to assess the risks presented by iron ore financing," the CBRC said, adding that regulators should also check if firms were logging fake trades to secure financing.

......Commodities such as copper, rubber and soybeans have been commonly used for financing, where traders or investors borrow against the commodity with the aim of investing the money in high-return areas in real estate or shadow banking.

As the financial noose on private mills and traders tightens, some state-owned firms that enjoy easy bank credit and are eager to keep profits ticking over in a cooling economy, have stepped in to fill the lending void.

To avoid unwanted attraction from regulators, many of them have offered credit facilities under the guise of trading.

"Some banks are cutting new credit to us this year, but some have given us more. So we finance companies by helping them to purchase raw materials and then charging them an interest," said a senior official with a state-owned trading firm, who spoke on the condition of anonymity due to the sensitivity of the topic.

Some private companies are also cashing in.

A senior executive from a major environmental rehabilitation company said his firm was also extending loans to smaller companies through the sale of coal and iron ore shipments.

"The coal or iron ore may not be sold in the end but we use the trades on paper to justify the loan and interest rates charged," said the executive, who declined to be named.

As the Chinese article says, every industry in the country has their risk alerts going off.

青岛港查库存"排雷" 铁矿石、铝和铜暂停出港

　The price of the "stumble endlessly" among metals commodities financing property market worried about the re-release of the signal.

According to Reuters, insider trading and warehousing industry sources, the current Chinese official being investigated Qingdao Port, Qingdao Port has been suspended iron ore, aluminum and copper departure.

Yesterday (June 3), there are traders to the "Daily Economic News" reporter revealed on Friday that the investigation has been the message, the problem appeared in Chittagong Branch Qingdao Port Group, the main reason is the emergence of a metal commodity stocks gap. There are sources said, a gap of metal commodities as copper. "Daily Economic News" reporter who has given a message to the people of Qingdao Port Group confirmation, but did not get a positive response.

In addition, including Qingdao Port, logistics companies, traders, and many confirmed to reporters that the investigation did not terminate outbound cargo, including iron ore, aluminum, copper trade is still running. But there are concerns about the industry, for the already depressed commodity markets, a more in-depth investigation may bring influence, some foreign banks may stop providing financing for Chinese enterprises to import commodities.

April 18, the CBRC has the following requirements Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, etc., 15 Banking Bureau of the jurisdiction of imported iron ore trade financing were analyzed.

Many industry insiders to the "Daily Economic News" reporter analysis, regulators in ores, metals in the field of finance, "Boots" is about to fall, the country's industry risk alert curtain has been opened.

Investigation Inventory /

In the eve of the Dragon Boat Festival this year, Qingdao Port launched a special survey by repeatedly pledged warehouse receipts, access to trade finance act.

In an interview with the "Daily Economic News" reporter, Qingdao Port Group, who said the investigation is still ongoing, but the person did not disclose details of the investigation.

Yesterday, one in the port of Qingdao in Shandong cargo storage business people said, had got the news on Friday, the problem is the port of Qingdao Port branch, "metal commodities, stocks and warrants do not add up, warehouse In terms of inventory. "But this message does not get official confirmation of Qingdao Port.

According to reports, trade sources said on Monday warehousing areas, Qingdao Port suspended due to investigations shipped out of aluminum and copper, which made banks who provide financing and metals trading company concerned; A trading company source said , "we are told, can not be shipped out of the metal during the investigation."

However, the "Daily Economic News" reporter from the Qingdao Port has business dealings with the Chinese Sinotrans Shandong Branch stakeholders informed, Qingdao Port survey inventory things are true, but it did not affect the clearance of goods transport within the harbor.

Qingdao Port Group's information display, May 31 - June 2, Qingdao port 184 inbound and outbound vessels, including large ore carriers 4. Distributing 1.47 million tons of goods in Hong Kong, including railways, roads, turn the water simultaneously to complete the three-way local acts 736,000 tons of ore.

Qingdao Port Dongjiakou port of a trucking company who also told reporters that, bauxite transportation has been usual, currently only Dongjiakou port, the daily delivery volume of more than ten thousand tons of bauxite.

In addition, in the above reports, sources say is: get the message after aluminum and copper were notched and 20,000 tons 80,000 tons, but the real gap may be greater.

But one industry to the "Daily Economic News" reporter, said, Qingdao Port to import commodities as iron ore, coal-based, copper-based product itself is not much, "may account for the country's imports of copper 1/6 . "

In the Chinese province of Shandong branch of Sinotrans view, compared with the current Qingdao Port over 1500 tons of iron ore stocks, total copper commodities hardly anything, only Shandong, Hebei, the two companies have inventories .

The above business people in Shandong Qingdao Port in stock, said the company former Bay Port Bonded goods store, but the company did not have problems. But the person to the "Daily Economic News" reporter confirmed that indeed there are traders or companies, problems in metal commodity stocks, currently under active investigation Qingdao port areas.

Financing risks reproduction /

The Company said that the goods in question, most likely appear in the bonded warehouse, and did not enter the market circulation, that the cargo warehouse, and may not exist.

It is worth noting that there is a market yesterday to the "Daily Economic News" reporter said that after hearing the news, many people rushed to Qingdao, confirm whether the metal warehouse on the real.

Singapore, a storage company who said, "the banks are worried about the extent of the afflicted, the urgent need to clarify whether there is a problem to get through the warehouse receipts pledge link trade finance."

A person listed on a domestic port, told reporters that the metal trading company can raise funds as collateral to, in some cases, the same batch of goods also pledged to multiple banks.

Because the characteristics of metal products, trade finance widespread in gold(1244.40, -0.10, -0.01%) , copper and iron ore and other areas, despite the different varieties, but broadly similar financing trade.

Iron ore trade financing, for example, typically steel or traders by foreign banks to open letters of credit (usually 3-6 months), after paying 15-30 percent margin, paid by banks to mining companies the purchase price. Subsequently, the ore shipped to mills or traders hands, you can repay the loan in 3-6 months later. In the meantime, if the hand of ore realized, it is equivalent to a certain period of time to obtain short-term financing.

Previously, I had expected the steel mesh, 40% of China's iron ore port stocks to be used as collateral to banks. A local iron ore trading company in Qingdao to the "Daily Economic Reporter" reporter said that at present the industry is generally presumed that 20% to 30% is more reliable and should reach 40%.

Iron ore traders have said in the past few years, repeated pledge warehouse receipt to obtain trade financing become an important part of the shadow banking. Among them, there are a number of traders using the same ore, in a number of banks to obtain loans.

I am a senior analyst in the copper colored nets CDC appears that the metal itself is not illegal financing, but once beyond the controllable range, venture capital-strand breaks may occur or default risk.

External analysis, due to the huge size of Qingdao Port, once the investigation is true that some foreign banks may stop providing financing for Chinese enterprises to import commodities, metals market downturn has long been possible to face the tide.

The above listed ports to the "Daily Economic News" reporter, said traders utilization of leverage leveraging of funds, a problem exacerbated by hot money inflows into China, which has led to the relevant departments.

April 18, the CBRC has the following requirements Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, etc., 15 Banking Bureau of the jurisdiction of imported iron ore trade financing were analyzed. Above the port said that the survey was not for the port, but the customers are mainly involved in the investigation of the four domestic commercial banks, regulators should be carried out on a centralized commodity financing thoroughly.